Kevin O'Leary, as smart as he is, can also be stupid at times. To him, it may not seem like a worthwhile investment, and that's fine. Personally, I think airlines are a great investment. Due to decreasing oil/gas costs globally in this past year, airlines have had the flexibility and profitability that they've needed. Instead of drastically lowering airfares to an equivalent percentage that the gas prices dropped, they've used their extra revenue on plane maintenance, improvement, and gas efficiency research. I think that the airline industry is doing great right now. In particular, I like what Hawaiian Airlines and Jetblue are doing. They've had a great 12 months and show no signs of slowing down. With their increased revenue, they've been able to purchase more hub locations, and expand their (relatively small) company.
I am also usually long-term, not my thing to watch the stocks every day, but this year is "special". Good catch on $NAT, congrats - and hope you are out by now. I am with you on $TNP, can see then go up 20% to $12-$13. Haven't looked at oil plays, I am more into alternative energy.
I actually think it's really smart to invest in airlines, although I have not done so yet. To be honest, I never think about it. However, our airlines aren't going anywhere anytime soon, and lord knows that they make PLENTY of money. I wouldn't mind having a slice of that pie.
I am alo under the opinion that airlines are a little too risky to invest in. At the moment the market seems to be saturated with more and more of the low cost, budget airlines taking to the skies. Terrorism isn't helping the industry either and until the market settles down, it's probably an area that I won't see much profit it, especially if your looking for a long term investment.
I've never been a fan of the sector over the long term. I struggle to align with the uncertain earnings and leverage issues. But there are always going to be trading opportunities, whether that's energy price related or random macro stories.
They actually AREN'T very profitable overall. They charge a pretty high price for each transaction and sell lots of tickets overall, but they also have relatively high expenses and liabilities.
yep, airlines have always been a low profit margin industry because competition is so easily accessible. For the vast majority of their customers, price is the only difference. If I am flying somewhere, I will go online and see 5 airlines can get me to the place I want to go.. for most customers, they are almost always going to pick the cheapest one, even if it is only $5 cheaper on a $500 ticket. This forces airlines to cut prices to the lowest profit margin they can sustain and the only time they have any type of pricing power is on their obscure routes where maybe there aren´t many other airlines flying.
