For Immediate Release
Chicago, IL – October 27, 2009 – Zacks.com announces the latest Industry Outlook. Today, Zacks Equity Research discusses the U.S. Airlines sector, including Southwest Airlines (LUV), JetBlue Airways Corporation (JBLU), United Airlines (UAUA), Delta Airlines (DAL) and American Airlines (AMR).
Here is the latest on the U.S. Airlines sector:
Though almost all carriers are expected to post negative earnings in 2009, we favor Southwest Airlines (LUV), as it is the most successful low cost carrier in the U.S. Southwest has maintained continued profitability for the last 30 years — even during periods of industry downturns — mainly due to its strong fuel hedging strategies. Low-cost airlines are expected to get a higher share of revenue in the future, which will see structural changes in the industry and consolidation as a result of competitive pressures.
Another carrier, JetBlue Airways Corporation (JBLU), is projected to fare better than the average major player during the 2009 recession due to the competitive nature of the product and an increase in demand for low-cost services. The company has been able to increase its revenues ahead of the industry average for the past four years. Though JetBlue recorded losses in 2008, it is trying to sustain its profitability by downsizing its workforce and canceling routes.
As a means of recovering lost revenues, some airlines have been increasingly using higher fees. Additional charges have focused on forcing passengers to pay more to check in additional baggage, which can cost up to $50 each way. This has led to a lack of pricing transparency in the industry. United Airlines (UAUA), Delta Airlines (DAL) and American Airlines (AMR) are some of the airlines whose reputation has suffered due to this. Moreover, volatility in oil prices in times of falling demand has taken a toll on these air carriers.
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