Thu, Aug 14, 2008
Lower Oil Prices Could Mean Profits... Even For United
We may have seen the darkest of days for the nation's
airlines. That's the word from one analyst with Morgan Stanley, who
predicted Monday 2009 could be a profitable year for many
airlines.
William Greene hasn't always been bullish on airline futures...
and he admits it. Thomson Financial reports Greene says he's
recently steered investors clear of airlines, telling them to hold
their money until the industry reaches its tipping point -- which
be predicted would come in the form of a global financial slump
forcing many carriers to restructure.
Having said that, it's a wonder what a sustained drop in oil
prices can do. Morgan Stanley now says the chances of such a
'tipping point' have decreased for 2009... and Greene predicts a
number of US airlines may actually make money, if not much.
Continental, Delta, and JetBlue could all make money, he now
says, as long as oil prices stay around $115 per barrel. Even
United Airlines -- a fiscal pariah in the current market -- could
post a profit as strong as $2.78 per share, Greene says.
Of course, that's assuming a lot -- specifically, that the
volatile nature of oil prices will continue their current
abatement, after coming perilously close to breaking $150 per
barrel. Prices have since dipped as low as $112; at this writing
Thursday morning, oil has rebounded to around $116 -- causing a
resulting dip Wednesday to what had been rising airline stock
prices.
Stil, that price is about right, says Energy Intelligence chief
correspondent Axel Busch. "I think (the fall in price) was premised
on a change in perception of the global crude oil market," he told
Sky News.
Hey, that's change we can believe in.
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