Fam62c

Are Airlines Stocks a Contrarian Opportunity?

Don't forget to talk about the risks. Many of these airlines (except LUV where you will gain the least if oil prices drop) will get dangerously close to bankruptcy if fuel prices don't drop rapidly very soon. When these companies pull the plug it happens very quickly with very little warning. I like JetBlue (JBLU) here as a bet (and I mean BET like at the roulet wheel) because they have a high percentage of insider ownership and Lufthansa owns 19% of the company. They may actually view bankruptcy as a bad thing unlike the major airlines who consider it a solid business strategy. They also have a good product and lower operating costs than the large major airlines so they may be able to make money and see opportunity where other carriers can not. If things turn around and oil drops this one will shoot up like a rocket. Beware though: if fuel stays up or goes up more for a prolonged period JBLUE will run into a liquidity crisis fast.