Thursday, December 15, 2005

Airline Stocks: AMR, Continental shares hit new highs for year - Airlines - Transportation - Markets/Exchanges - Market News

Life is good!

AMR and CAL. hit new highs for the year while oil prices traded over $60 per barrel. A five dollar drop in the oil price from here could set AMR and CAL. on fire. These companies have cut cost by such a huge amount that labor is no longer their largest operating cost. Fuel is the biggie now and these airlines are projected to make money in 2006 even if current oil prices hold for the year. A drop of $5 per barrel will boost earnings to the $4 plus area. These stocks could shoot right past their old all time record highs in just a couple of years. What a turn around?

The above was written this morning. By late afternoon, the oil price was down a bit and AMR and CAL. soared in price. There is a rumor going round that the congress may yet pass pension reform. Passage would help AMR and CAL. more than most as there are special previsions in the bill to spread out the payment of airline pensions over 20 years. The benefit would be a welcome boost to cash flow and liquidity.

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