Time To Short the Airlines Due To High Fuel Prices? (AMR, CAL)

Includes: AAL, UAL
by: Andy So

I've been considering shorting AMR Corporation (NASDAQ:AMR) and Continental Airlines, Inc. (NYSE:CAL). AMR has a 52 week high of $29.14 and closed yesterday at $24.12. CAL has a 52 week high of $28.90 and closed yesterday at $25.95.

I believe CAL is moving up faster than AMR under speculation that CAL is gaining long term market share from bankrupt Delta (DALRQ.PK) and Northwest (NWACQ.PK). No one knows if the market share gains will be long term or short lived for CAL if Delta and Northwest successfully emerge from bankruptcy.

My target is still this Thursday (April 27) to short shares of AMR and CAL. I’m looking this week for crude oil prices to stay above $72.50 and for CAL to stay at current prices. I will also consider shorting shares of AMR if the stock rises above $26.

I use this Bloomberg page to track the price of crude oil. The page dynamically updates with a 15 minute delay in real-time prices.