08 December 2009

Airline industry leading economic recovery?

The up-and-down airline industry is headed for a recovery, analysts predict, for several reasons:

• Fuller planes

• Fewer discounted fares

• Lower fuel prices

• Revenues from a variety of formerly free services are starting to pay off

"The signs of improvement are most advanced at low-fare carriers that focus on domestic
Flights," said the Wall Street Journal.

Said Wall Street research analyst David Silver:

"I think you're going to see that these smaller companies are going to have much more room for growth. They're not really into this hub-and-spoke-type mentality; they're able to expand quicker, get more engaged even into the smaller cities and really turn a profit."

To cite one recovery example: passenger miles and revenues at Southwest Airlines Co. soared 12 percent last month from a year ago.

Stocks were also surging during recent days, particularly after the unemployment rate unexpectedly dropped to 10 percent last month or smaller then the expected 10.2 percent.

Job losses totaled 11,000 or less than the expected 130,000.

Partly as a result, the AMEX Airline Index lifted 4.3 percent to its highest point in almost two years. That index started to come down this week, however.

"Airline stocks dipped Monday following a two-week surge in gains that came with investor enthusiasm over a recovering economy," reported the Wall Street Journal.

By David Wilkening