Due to Hurricane Irene, airlines have canceled about 9,000 flights all along the eastern seaboard, north of North Carolina. I don’t believe that the economic effects of this will be significant to the airline industry because travelers will still have to get home so they will fly a day or two later.
But what is the bigger picture of the airlines. AMR Corporation (AMR) operates American Airlines and its stock price has gone down from a high of 40.66 in 2007 to 3.26 in today’s trading which is about 9% of the 2007 price. Since July 2010 it has gone down from 6.93 to 3.26 losing about 50% of its value.
Delta Air Lines Inc. (DAL) has followed a similar stock price pattern but is less extreme. At the end of 2007 to the stock was trading at about 20 and it is now trading at 7.12 about 32% of its 2007 price. Since July 2010, the stock has dropped from 12.2 to 7.12, losing 41%.
Finally United Continental Holdings, Inc. (UAL) was at 35.75 at the end of 2007 and today is trading at 17.92, maintaining 51% of its 2007 price. However, and this is the important figure, in July 2010 UAL was trading at 23 and today it is trading at 17.92, a drop of a mere 22%.
We see that the profits in the airline industry are going down across the board. Part of this is no doubt because of declining economic conditions. People have less money and the first thing to cut is leisure airline travel. However, when the economy stabilizes, and I believe that it will at some point, UAL will definitely be the preferred option.
UAL is managed by Jeff Smisek who is the Chief Executive Officer. Jim Compton is the Chief Revenue Officer. Zane Rowe is the Chief Financial Officer.
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