By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – To say the airline industry has been in turbulent skies for the past two years would be an understatement. The transitional phase is anything but over and, although most recent forecasts are bright, it will be quite some time before it's smooth travels. I'm Maxine Shapiro with KERA Marketplace Midday.
Since the tragedy of two years ago, there are now 5,000 fewer flights. Airline travel is down 6% worldwide and 16% in the United States. In the stock market, the airline index is down 2%, compared with an almost flat Dow and S&P index. And as a little surprise, the technology heavy NASDAQ is up 1%.
But over the last six months, airline stocks have enjoyed a nice bounce. If one were to hear just the percentages, one might consider millions have been made on this upturn. So it's important to remember where these stocks were a half a year ago. For example, the stock price for AMR - parent to American Airlines - has surged up 493%. Keeping it in perspective, in the middle of March it bottomed out at $1.25 a share. Today, it's at about $12.50 a share. Northwest Airlines, trading at nearly $11 dollars today, is up 54% in the last six months. And according to the Department of Transportation, last month Northwest filled over 82.5% of its seats. Only Jet Blue, an airline I would love to see come to DFW, had a higher load factor of 91.6. But as I reminded you earlier, load factors should be up with 5,000 fewer flights.
In fact, the news has been so encouraging that an analyst from J.P. Morgan reversed his prediction for the airlines in the third quarter. Instead of an earlier expectation of a collective $150 million loss, he's now forecasting that same amount in operating profits, while other analysts and many of us non-analysts question, "Are they sustainable?" To be seen. For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m.
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