Are Airline Stocks A Good Buy?

April 20, 2010

(You may need to increase the font size of this essay to enhance your reading pleasure – to do so hold down the Ctrl key and press +) Is it a good time to invest in Airline stocks? Well it really depends. If you go by mainstream logic this is the last place where you should put your money – firstly the volcano shows no signs of slowing down as it continues to vomit out engine clogging shit – according to the Geneva-based International Air Transport Association estimated that the disruption is costing the industry some $200 million a day in revenues. But I think this is only the tip of the iceberg as it doesn’t factor in accommodation, delays, bottlenecks etc.

Just to give you a relative heads up of how bad the situation really is IATA estimates more than half of the airline traffic has either been delayed or cancelled.

So why is this a good buying opportunity? Simple – where there is crisis there is opportunity – if you notice the price of oil has been dropping – you know why? Most planes are grounded. May not make sense as the cumulative fuel used by commercial jetliners is less than 1% of the total oil output; but common sense doesn’t always need to prevail in the market; in fact, common sense is never the equalizer –  what’s important to me is the market believes the price of oil should go down and down; that may not make sense; but if you believe in angels; then it makes perfect sense to debate on how many angels can you fit on a pin head – get my drift? – and that simply means when air travel is back to normal again, we will all probably benefit from reduced oil prices.

The other thing about air travel is it plays an integral role in the global supply chain of goods and services – that simply means; to get around this act of God impasse airlines will be forced to cooperate with each other – they will share routes; enter into mergers and even combine their resources to get over this kink – what most people don’t fully understand is these events can take off on a Monday and get penned on a Tuesday –the case is pressing when you consider how so many goods and services we typically take for granted are actually dependent on air freight – sushi, cheese, tulips, diamonds, medicine and virtually every perishable product is vulnerable providing planes remain grounded.

 The way I see it; this is good for the industry as a whole; as till now the airline industry hasn’t really changed since the days of kitty hawk; with this volcano event, it’s going to be a leveler and it will probably send shock waves across the industry to compel many airlines to either merge or form alliances – that simply means the will get bigger, meaner and leaner and all that just make for a perfect investment – I hope that volcano continues to spew its shit – as this can only mean airline firms will be so shaken up and stirred, then may just be the perfect buy to make mad money!

Meanwhile check out the latest gift I receive recently from the Interspacing Mercantile guild based in Munich, its a lie detector built into a side arm of a chair – looks benign enough; but once you sit on it; it registers everything from heart beat to 10 other metrics that I am still trying to figure out – best thing is the person who sits on it doesn’t know this is the best shit snooper ever created. There are only two in the world; one in stainless steel trim the other in pure 18 carat gold fittings!

Slide a hidden electronic switch and what do we have? A super high tech control system all designed to detect shit at up to four gradations – told them on my last trip (and this was only a joke btw), that I was dealing with too many snakes these days; so I would really appreciate it if someone could come up with a shit snooper; they sent two versions, each weighing roughly one metric ton of these beauties – that’s just what a need in the age of endless age of hype, spin and lies.

If you want to buy one of the most expensive shit snoopers on this planet, just let me know, it comes with full connolly leather trim, and custom medical grade arm rest with even an option for 18th carat solid gold fittings – guaranteed to work (i.e smell out liars, or your money back) – sells for USD $50,000 – why do I have that sinking feeling, they gave it to me because they couldn’t find some one dumb enough to buy it?

But seriously, as soon as they came out with this prototype; the Germans claimed proudly (as they always have a habit of doing) they have already 5 firm orders from the Middle East.

Thanks for the fish! Now if only I can move it without a crane….

Darkness 2010 – The Brotherhood Press 2010

Disclosure: The author has positions in US Airways Group Inc – ticker: LCC.

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