Airline Stock?

[Craig]

Anyone own any airline stocks, why, and why not?

Every now and then I'm tempted to buy a little LUV, especially when I fly another airline ... and remember why I prefer Southwest. They seem to have the 'secret sauce' ... they're friendly, they're safe (recent tragedy an exception), their folks have a sense of humor, and they're on time, with rare exception.

Thev've been around nearly 40 years now ... I wonder how the stock works out on returns, considering all of the splits.

 

[yakers]

Nope, don't own any except as part of S&P500 index fund. Lots of people have lost lots of money on airlines. I expect there will come a time to buy or maybe you can pick the successes (SWA?). But smart people like Buffett avoid then and unless I had some special insight I would too.

 

[soupcxan]

I know someone who bought some Independence Air a while back when they were first starting out in 2004. I think his dad also got in on it. Talk about a crash and burn.

 

[justin]

Everyone is so down on Airlines, now might be the time to buy. I'm no stock picker, so I'm not going to. However it would definitely be a contrarian move. Nobody is talking about buying airlines right now.

 

[cute fuzzy bunny]

Well, only one has consistently made money and only one airline stock has been more than a crappy performer...the one you're looking at. Taking it away from the easy comparison to a bad bunch of businesses...its had a few good run-ups but also has very long periods of stagnation. PE is pretty high for a transportation stock.

I also wonder if Southwest isnt all about Herb Kelleher, and besides being a chain smoker he's not a real youngster. I guess it depends on if you think companies like Southwest and Berkshire Hathaway are as successful after their founder/chairmen retire or pass on.

My bet is jet fuel doesnt get any cheaper over the next 10 years, technology really starts eating at the need for "business travel" at the level it exists today, and unless you're really scraping the bottom of the barrel for diversification...I'd look elsewhere.

 

[justin]

You might be right (). I'm just thinking of the new KMART, post bankruptcy. Buy something dirt cheap with prospects of recovery (newly issued shares of one of the formerly bankrupt companies??). LUV is already doing well and looking at the PE, probably is priced based on people's assumptions that it will continue to succeed. If unions remain a large part of post-bankruptcy life for the newly emerging airlines, I personally would steer clear of them.

Anybody looking at GM or Ford as a bottom of the barrel good pick for recovery (not me!)?

Anybody looked at the international airlines?

 

[cute fuzzy bunny]

If I were in the individual stock buying business, I might buy some GM. Ford just doesnt taste good even as a deep bottom feeder buy. I dont think they're well managed and they're too deep into big trucks.

I doubt GM will be allowed to "go under", although as a value pick its a lot riskier than most. I also have some reservations about GM "getting it" and really being able to compete with strong products, improved reliability, and better service to customers.

So I wouldnt buy a ton of it, but i'd buy some.

 

[73ss454]

()

I can tell you first hand that the people at Ford don't have a clue.

Management is the problem.

 

[cute fuzzy bunny]

A chevy guy working at ford? Do they make you park your car in the next town over?

I have an expedition in the garage thats been in for service about 30 times and has a handful of things wrong with it right now waiting for me to get around to fixing them. Doesnt even have 50k on the clock. So the engineers/assemblers arent real clueful either.

Toyota RAV4 sitting next to it hasnt been in for much of anything other than maintenance in the same time period.

I'll tell ya one thing though, I was looking at the "no haggle" prices the local GM dealers are throwing around for suburbans and tahoes and its tempting. I'm sure i'd have all the same sorts of problems, but a new full sized SUV loaded, in the mid 20's is worth some aggravation.

Then I thought about the sales tax, insurance and the annual 'car tax' going from a few hundred a year to thousands, and stopped thinking about it.

Sorry for the hijack Charles. Unfortunately its what I do best...

 

[justin]

I have an expedition in the garage thats been in for service about 30 times and has a handful of things wrong with it right now waiting for me to get around to fixing them. Doesnt even have 50k on the clock. So the engineers/assemblers arent real clueful either.

The problem is that dirty four letter word - F*** that is on the back of your SUV.

That little F.O.R.D. emblem should have been fair warning of the problems to come.

 

[cute fuzzy bunny]

Yeah I know, I've owned Fords before (along with just about every other brand), but it was the only SUV on the market at the time that I could fit my kayak into, aside from the Excursion. The Excursion wouldnt fit in my garage...well it would but i'd have to walk around the back of it before I closed the garage door.

No, i'm not making that up. I was a daily kayaker at the time and I couldnt stand strapping and unstrapping the thing from a roof rack, and I was always concerned someone would steal it. With the rear seat down the kayak slides right in comfortably. Oh yeah, and I was driving a piece of crap at the time and decided I "deserved" a new car.

The big toyota and nissan SUV's hadnt come out yet, although every one of those I've seen ran in the 40's well optioned. Pretty spendy.

 

[justin]

...although every one of those I've seen ran in the 40's well optioned.

at least they ran...

 

[73ss454]

Now Now Justin, be nice!

 

[cute fuzzy bunny]

lol

The expedition always runs. Transfer case had to have six "operations" on it before it worked right.

My favorite was last summer when I locked the truck up on my way to a day of kayaking. I had my remote keyless entry with me, safely stowed in that little interior swim shorts pocket that is designed to prevent you from losing what you put in it, you know, it has that little flap thing.

Well so I lose the keyless entry thing somewhere during several miles of the feather river. I'm pretty sure I lost it at the point furthest away which is the only place I got out; its not in the pocket, its not in the kayak, must be there. No way I have enough pop left in me to paddle back there, look for it, and paddle back. Its also 105 degrees out and i'm out of water.

No problem, I have that cool little keyless entry pad on the driver door. Key in my code, voop goes the motor and the door lock only opens half way. And thats it. I later discover that pushing another button (I think its the '5' on the pad) opens all the doors. Turns out this is some widespread problem with ford truck power door locks where the coupling between the motor and the rod that opens the door loosens up. The rear tailgate has similarly developed the same malady. Its on my things to do list...

So I had to bum a cell phone from a fisherman (mines locked in the car), call my wife. Of course, I also have the car seat in the truck, so she has to leave the baby with a neighbor while she drives over with a spare set of keys.

So sometimes the running part isnt the big thing. The getting into the vehicle can be a problem too.

I could go on about how I ran a yellow light on the way home right after they installed one of those red light cameras that the towns around here are growing to love; fortunately they only send warnings for the first 30 days. Or the pedestrian who tried to run out and around me against the walk light while I was in the middle of taking a right on red and not looking in his direction.

That was a day to pull the covers over your head and not come out again...

 

[yakers]

Since this thread had been thoroughly hijacked I'll just add--my kayak transportor is a 1985 VW Westfalia camper. It has 145K miles. Ran like crap for a while, this was one of VWs worst efforts, turned their decent aircooled flat 4 engine into a terrible watercooled unit. After enough mechanical hassels it now has a Subaru engine replacement. Three years no engine problems. Nice camper kit. Don't feel to concerned that I even venture to Death Valley in it. I usually have my kayak on top but can fit it inside if I had to. Locking cable & rack have been enough.

 

[Nords]

Anyone own any airline stocks, why, and why not?

Pardon my returning the thread to its original topic.

Warren Buffett says that he has a phone number he calls when he wants to buy an airline. He says "I'm Warren and I'm an airline-aholic", and they talk him down from his purchase. He says in his 1996 report: "In another context, a friend once asked me: 'If you're so rich, why aren't you smart?' After reviewing my sorry performance with USAir, you may conclude he had a point." You can read the rest of his USAir saga in that link and consider how labor unions & jet fuel costs are affecting airlines today. Then you can read more of his airline thoughts at this Google search. He's having a much better time with NetJets and FlightSafety.

However I think Ford & GM are at least as bad as airlines. Union & fuel costs (as well as a general cluelessness) will force them into bankruptcy as a legal maneuver. It's possible that we'll learn in a few months how Buffett was buying GM junk, but that's how he got his head in the USAir beartrap too. I hope he's learned his lesson!

 

[Chris24]

The only thing I can think why airline stocks are having a field day is "irrational exuberance". AMR, (only airline never to be in bankruptcy) went from 10 ish to 23 in 4 months. Management in need of money, figured they were blessed with an opportunity to sell 225 mil of stock at 17 and build their coffers up to 4 Bil. (anything lower than 2Bil, bankruptcy looms). NO one wanted to talk about the 23 BILLION debt sitting in the room. Forecast 1st Qtr is for 275 mil loss. Debt payments increase 60% in 2nd Qtr. (due to restructuring debt in "03"). Why anyone would want to own an airline stock, other than playing it short term,(trains left the station) with so many other , less risky investments is beyond me.

Christopher

 

[Gearhead Jim]

Getting back to stock picking-

I expect that GM or Ford, and probably both, will go Ch11 by the end of the decade.

Management is too dumb to design desireable cars.
Labor is too dumb to take the cuts necessary when building UN desireable cars.

The company will go Ch 11
The bankruptcy judge will void the labor contracts, leading to
-Huge cuts in production and employment, and
-Huger cuts in pay, benefits, and pensions

There will be a few years of turmoil, worse quality, and erratic availability.  When it's all over, the company will be leaner, meaner, and able compete.  And a job at the car factory will be about equal to a job at McDonalds.