Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Summary: On Tuesday, United Airlines reported its second quarterly profit since emerging from bankruptcy in February. The EPS came out to $1.30 per share on $190 million of net earnings which compares favorably to last year's $1.77 billion net loss. Analysts had expected earnings $1.43 per share. 3Q profit, excluding special costs, came out to $335 million, a significant increase from last year's $165 million. UAL stock initially soared almost to a 6 month high as a result of the earnings report. However, it sank later in the day by almost 3.5%, mostly due to analyst concern regarding rising fuel costs. Though crude oil prices, which are directly linked to those of jet fuel, fell in the last month, they still remain at record highs. The industry's intense price wars also make it difficult for airlines to pass fuel costs onto the consumer. UAL is trying to raise overall capacity and cut costs elsewhere in the company in order to offset lower ticket prices. Overall, analysts are still not crazy about long-term investment in airline stocks.
Related links: You Don't Have to be Crazy to Buy Airlines • Lower Oil Helping Airlines • Airlines Vie for Lucrative New China Route • CNN/Money: UAL turns in profit, stock falters
Potentially impacted stocks and ETFs: United Airlines (UAUA), Southwest Airlines Co. (NYSE:LUV), Continental Airlines Inc. (NYSE:CAL), British Airways Plc (NYSEARCA:BAB), AMR Corporation (NASDAQ:AMR) • ETFs: iShares Dow Jones Transportation Index (BATS:IYT)
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