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Wolfe Trahan & Co. Senior Airline Analyst Hunter Keay on the airline stocks to watch in the year ahead.
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Electrode percent less than our hundreds of flights grounded today due to bad weather.
But some airlines stocks are getting ready to take off the leader not in 2003 -- -- find out who the winners and the losers are joining us now -- -- case senior analyst at wolf -- hand and company thanks for joining us.
Hunter.
Right now the when -- airlines in a bit of a bumpy and gain some Bobby skies right now with all the weather delays first stopped as its impact the stocks are in the economic impact and also we thinking about it the now.
Investors overlooked whether.
Instances.
Frequently I mean do we center in San drilling for oil and sucks up from the -- the -- -- and the week after so.
At this point investors -- look for that everything.
-- one of the most surprise and -- for me is that airlines have learned how to make money was sky high gas prices fuel prices have they done that yet it's it comes down to really two main things and that's capacity discipline -- removed about.
8% of domestic capacity over the last four years Leon is that they're just grounding planes well they're there they put -- a lot of fuel efficient planes back in no way it absolutely but have also trimmed to underperforming flights so.
Domestically the US airline industry is about the same size is -- was 1999 despite the fact they're obviously more passengers and the other thing.
The other things fees and -- all the bag fees and better -- -- critically important but it's helping them it's only you know single digit percentage of the revenue but has about 55% of their ebitda.
Because it's just a 100% margins.
-- expects her pillow eventually help somebody I -- highs take a look at a couple of stocks sad that we're doing very well this year Southwest Airlines 20% Alaska Airlines up 15%.
While this -- their recipe for success and what can EC carry over into the new year.
Yes I think a lot of people were very pleasantly surprised with the pricing that airlines continues to sustain.
Going into the fourth quarter because he had a limited decelerating pricing movement going into the fall period -- a lot of people thought okay the party sort of over -- the consumer sort of pull back.
And then they just rebounded so November December pricing trends that we saw were much better than a lot of people anticipated.
By the way we're looking at your list of what you think 2030 would be the best performers they were all down today that's just -- yeah but cope up the last one that's.
I went -- was covering Latin America again tick -- in Central America -- we used to joke about coping it was like it was like Aeroflot or something yet valued -- that.
You have to tie your seatbelt on out and got quite a bit but -- that they have proved quite have been enough fortunately for the -- playing Soviet era aircraft which helps a lot too but.
It's incredible that -- reveal their first although the most profitable on the world.
Global that -- global basis.
Second -- there'll there'll there'll -- -- and I know that's grown earnings for eight straight year they still based in Central America gather in Panama.
Anything about the country of Panama is really just kind of this a bastion of capitalism of -- -- socialism and it's a very stable government.
That supports the airline industry and I think -- was a perfect example what an airline could be in a perfect supply demand environment where the government doesn't tax the hell out of -- unlike here in the states.
Oh yeah airlines announced that that I before we let you go fiscal cliff it -- Americans are coming back on and buying retail stuff at a retail stores what about.
Concerns about cutting back on flights next year.
So fortunately that the scheduled -- that we look at in advance shows that airlines are getting ahead of the curve and cutting proactively.
But -- mid single digits on capacity to January and February so if there is a demand drop off.
You know the pricing impact should be sort of mitigated because of the supply that's been proactively removed but.
Consumers usually book air travel months in advance and what we see so far on the books are in January for -- looks great hey before you go into the did to worst performers from your perspective.
To my eyes were were -- -- the best airlines southwest and jetBlue what led to their I don't wanna -- demise but to -- going -- yeah I mean you know and to be fair I mean they've had good runs to the stocks that's -- -- are just expensive right now I mean it's.
I talked about fees right as we all know if you watch NFL football game you're -- of it's very obvious the southwest is charging for bags -- -- -- commercials are released in Jordan five million dollar and I love that about southwest -- deal but it out unfortunately they have a 4% -- IC NN trailing twelve month basis -- is the worsen our coverage so.
You know that's gonna change that policy is gonna change not with his management in place and I don't and it's such a trademark now of the airline that's part of -- branded value brand very very deeply southwest -- praying that they make it because I love that got a -- do we find okay hundred K good -- -- -- hundred -- -- -- and appreciate it.
