While air travel volume globally is currently close to normal, according to the International Air Transport Association, the outlook is much weaker. Average second-quarter financial results have declined by 60% while fuel prices remain up 50% from last year. And with new aircraft deliveries up this year, airports are facing increased costs and more pressure to fill seats.
The summer season is the busiest time for airlines, which generate most of their profit during the three months from June to September. But the IATA says “market conditions are now deteriorating.” The industry earns a total of 80% of its profits in the second and third quarters combined, and with huge losses during the second quarter, the industry is already looking at significantly less revenue in 2010 than in 2011, unless it can make up for it elsewhere.
Airline stocks are down 4.09% over the last five days of trading, and declined 2% today in early trading. US Airways (NYSE:LCC) declined 3.45% today, leading losses by Southwest (NYSE:LUV), Delta (NYSE:DAL), and AMR Corp. (NYSE:AMR), all of which declined 2% or more today.
Stocks to Watch: JetBlue (NASDAQ:JBLU), Alaska Air Group (NYSE:ALK), United Continental Holdings (NYSE:UAL), Southwest (NYSE:LUV), Delta (NYSE:DAL), AMR Corp. (NYSE:AMR), US Airways (NYSE:LCC), Hawaiian Holdings (NASDAQ:HA)