Why Airlines have and will continue Soaring, especially DAL and ALK
From his post today, it is obvious hundleyrandy doesn't understand this industry or economics or the capital markets, but a growing economy and interest rates returning to more normalized conditions will be an economic backdrop that is very good for the airline business.
Loads are excellent and why airlines are now, reluctantly, adding capacity again (did you all see UAL's call yesterday for 600 pilots to return from furlough?).
PRASM is running mid single digits.
Fuel costs are up, but largely offset with more efficient engines coming on line with new planes, fuel surcharges and hedging programs. Additionally, the Syria noise will soon be over with a whimper, resolving to yet another mess left behind by vacuous U.S. "policy." DAL, with its new refinery, is in the A1 space on fuel.
CASM is well under control. New planes reduce maintenance costs and overcome legacy problems. Slots are re-rationalized to focus on profitability vs quantity, and merger costs/synergies are just coming to the fore for DAL in particular.
DOJ moved to block LCC/AMR merger, but quickly backed off when met with forceful pushback.
Continuing the trend since last year, the group is going higher 2H13, but DAL and ALK are the clear winners on every front, which is why they have outperformed the group and will continue to do so. We even pulled the UAL paired offset on the news of the ceo's big buy last week.