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Cheaper Oil Prices Boosting Airline Stocks?

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    Imperial Capital managing director Bob McAdoo discusses the future of airline stocks.

  • Duration 3:26
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OK well airlines have enjoyed a storybook -- in the last year is Burgess of help reduce capacity the question now is whether.

Pricing discipline will continue to prevail in this.

Notoriously difficult -- up.

-- discuss the future of airline stocks bought back -- managing director for imperial capital Bob thanks again for joining us.

We've seen the airline stocks moved nicely -- it can't all be down to.

She -- crude oil prices though right.

No I think you you're seeing.

A history of that that's changed a little bit here recently and and use.

You guys that are running the airlines are now thinking about profits rather than market share and so keeping a lid on excess capacity is really what's driving a lot of the better numbers.

-- house voting comes taken a hit -- these payroll taxes.

Moving higher is -- fact that the airline is moving forward as consumers rein in spending.

Doesn't seem like it's happening we we talked to number of airlines recently and and nobody seems to be seeing that the tax increases are really getting -- -- so.

You know we've we've seen in the last -- to the the -- the revenue results for a couple of the airlines and everything seems to be right on track.

Tax problems not the issue.

All right so is consolidation in the industry essentially over we have -- make American.

US Airways we knew it was coming it actually happens and now is that it for the industry.

I think so.

I mean really if there's any -- it's it's gonna these small guys and and they really are gonna be you have to have a real impact so we kind of got all the big ones put together we're down to four.

We'll have the American the delta.

The united and then southwest AirTran coming together and and once you get past that he -- jetBlue and frontier and a few other smaller guys that none of them seem really.

Kind of geographically such -- -- makes -- or or even or even more importantly that the the managements don't seem really do interested in trying to put things together so I think -- probably it.

You know fewer options for the consumer normally means higher price is can we expect airfares to rise slowly.

I think you'll see a modestly maybe with inflation but I think it more importantly what what probably will cause people to complain as if there were higher prices is that.

-- because without without new capacity coming on with a little bit of -- growth in GDP.

You probably see that it's it's tougher and tougher to find a really cheap seats occasional 597989.

Dollar seats are going to be.

They're going to be harder to find you're gonna be stuck with -- in the middle of the road 200 -- -- more often than not.

You know many investors wouldn't even let go and touch the airline sector as far as an investment with a ten foot pole.

Is that changing -- there's some real good business strategy going on now that they could be an attractive investment.

Well you know I think they're there's they're always gonna be volatile they're probably still some risk Larry it's not for everybody.

But it certainly seems like -- kind of turned the corner we have the consolidation we have a group of guys that are running that.

The airlines which is and one guy said the other -- that the longer -- the larger than life guys running the airlines again that are running and our former.

Accountants former CFOs.

Former -- so.

The other businesses now let's make let's make some money so you still have the risk that that.

You know something breaks out in the Middle East and the price of oil -- rightly that could cause a problem but but generally I think it the other business has changed it's a different business now.

That at times ahead Bob I could -- from imperial capital Bob thank you for joining us.

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