DAL NO! NWAC NO! CAL YES! AMR YES! LCC YES!

A reader mentioned plans to buy Delta Airlines and I almost screamed no! It is foolish to invest in a company that has filed bankruptcy when it has far greater liabilities than assets. The likely hood is that bond holders will get only a fraction of their investment back. Unsecured creditors will get even less. Common stock holders will probably get zero!

Airlines such as USAir, the new symbol is LCC, is an entirely different story. The companies cost were cut deeply by the judge, the debts were dramatically reduced and the company has operating cash to use.

AMR and CAL are different too. They cut cost enough that they do not need to file bankruptcy. CAL made 80 cents per share this past quarter. Eighty cents per share profit would be no big deal except for the tremendous cost of fuel. The recent decline in fuel will reduce costs by millions of dollars for the next quarter.

If any of you own DAL or NWAC, I suggest you sale immediately. My family did not believe either firm would file bankruptcy and we lost money on each of these stocks but our profits on AMR, CAL and LCC have made up the difference and more. We expect good results for the next several years. Anything is possible, but the odds of making money by owning shares of stocks that are currently in banktuptcy are slim.

Many times you hear the story of the bankrupted company that rises like a Phonix out of ashes. This indeed happens but typically the "old shareholders" make zero and the "new shareholders" make a bundle. Take the case of K-Mart as an example. The "old shareholders" lost. The bond holders became the "new shareholders" and did very well.