AMR Reports Positive Cashflow, Others Doing Better

Is it over? Has the scarey travel industry slump ended? Did the bad man from bankruptcy court go away? Maybe.

Business Week Online reports investors are downright optimistic about the airline industry, after AMR, parent corporation of American Airlines, reported positive cash flow from its operations in May. Standard & Poors analysts say they think American's cash position has stabilized -- just two months after the carrier threatened bankruptcy and fired its CEO, Don Carty, rather than lose a concession deal with its unions.

Airline stocks are up an average of 15.3 percent this year, after tumbling in 2002. Standard & Poors says industry losses could be less than expected this year, with a five percent gain in revenue passenger miles across the board.

Analysts expect point-to-point carriers like JetBlue and Southwest to continue doing exceptionally well in the current economy, with American, Continental and Northwest continuing to lose - just not as much as last year.

The key to survival for the majors, according to the money-watchers on Wall Street: Keep cutting costs and boosting RPMs.

In other words, the worst may be over, but don't put away your umbrella just yet.

FMI: www.businessweek.com