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Wolfe Trahan & Co. Director Hunter Keay on the airlines for investors to consider, and to avoid, for their portfolios.
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-- close slightly hired -- but down about 8% so far this month.
One and a half percent more than slightly at buck up to the upside now -- above eighty dollars a barrel but.
But overall it's -- -- royal we're seeing usually good news for airline stocks we have an analyst who says you need to be very careful.
Which stocks you should buy because they can figure out how to capitalize on lower oil.
In different ways hunter Kate is that analysts -- senior analyst at Wolfram great to see you thank you for damages and a well how do you decide which airline is Smart enough to capitalize on oil prices.
Well first of all if you if you're gonna be trading -- phase of trading on spaced drill our oil prices -- -- obviously -- the ones that don't hedge fuel that's only allegiance and US Airways.
Every other airline has some degree of hedge that exposure and a lot of those airlines with the exception of Alaska have put on collars -- created floors himself above the spot price so they're not going to be participating fully.
In the -- commodity prices again because they already made their deaths -- unfortunately they've got -- the to protect in the upside they've sold puts they sold calls to buy some -- or vice Versa depending on which -- going and they essentially created collar position which is now underwater that you mention -- you were a big fan of leader not a big fan of all airline yeah but why is it that -- -- is a good pick for -- -- Allegiant is really really interest thing this is an -- continues diversified business.
They get about 35% of pretax income from selling packages so hotels rental cars is -- very stable business model.
There and it's almost like a travelocity and an airline in one yet that's right exactly and they've got some really exciting nineteen overhaul initiatives in the pipeline -- -- at some point by a hotel -- rental car.
And airfare on say united.
I'm allegiance website so I'll -- a lot of interest in things in the pipe on the very different how do you feel about united united has had a tough flood if had a tough -- -- this year.
Integration with the continental merger has not been going very very well.
They've underperformed peers on revenue and my opinion sentiment in the investor community is pretty negative on united which I think creates opportunity the stock is cheap -- -- a lot of really good things I think.
It's going to be probably a tough few months for them that he gets in the back half of the year and next year I think -- upper -- a lot of good things about southwest but not from new well I mean look southwest I think got an absolute basis is going to be just -- -- for so bullish on the group overall I think it's going to be a relative under performer in my sector.
The shares are little expensive.
The value brand they subsidize frankly happy customers and labor.
Through equity investors and that's going on the position that we like to be and so when -- when.
You look at low cost airlines they sometimes have higher fees they want to get to wind with a low baseline fee of O Sam Francisco to New York it's cheap and then they add on.
Some of the costs could that backfire eventually on the you know its interest -- customers like this they complain they say you're nickel and -- yes but they choose these airlines say -- hats -- It's a spirit ours for example average -- 77 dollars they -- 52 dollars per passenger and he's each way.
-- but still even with that 120 dollar all in costs -- still -- point five dollar below jetBlue is average fair.
-- customers get to pick and choose what they use modify their behavior to avoid all these fees which is what spirit wants anyway.
Because if they -- -- bags -- -- -- going to fly them around I hate to hear that these things are actually working my -- -- finding -- spirit your your favorite -- spirit -- I think -- pretty much neck and neck at this point I think you can you will either one of those right now hundred okay.
Thanksgiving to Syria much Phoenix and and.
