Paul Meisel

You Don't Have to be Crazy to Buy Airlines

Before I ever heard of Jim Cramer, my dad, who cut his aviation teeth in biplanes, said "never buy airline stock, it's a lousy business, they can't make money without subsidies".

Cramer has recently softened his position for a logical reason: with Airbus delaying introduction of their new superplane, and Boeing having long lead times, perhaps for awhile there are enough barriers to entry to allow a well-managed airline to make money. And your observations on margins above are consistent with that. My recollection is that in the past when margins got good, new competition sprang up to squeeze them. Perhaps that will not happen this time.

I still wouldn't buy and hold, but it could be a money maker for a year or two.