"I've never recommending an airline and I'm not going to now." ("Mad Money Lightning Round," 6-8-09)

Airline exposure

From a recent Mad Money show:"I will not recommend an airline on this show. No airline stocks."

Down a bit since purchase but I fly the airline monthly.

Airline shares have been pummeled of late, including Southwest Airlines, which is down about 35%, to $7 and change. But next year's earnings could rally 50%, according to analysts, and the company's balance sheet looks healthy.

China Watch: United Air Scales Back:
Airlines reporter Ted Reed explains why United Airlines is reducing frequency and eliminating routes to Hong Kong added only a year ago and whether there's any good news in the Pacific.

Click here to watch the video.

China Watch: Airline Turbulence:
Airlines reporter Ted Reed weighs in on the three major Chinese airlines, all of which experienced declines in August.

Click here to watch the video.

Q: You hold Continental Airlines [CAL] and Southwest Airlines [LUV]. Why go near such a difficult sector?

A: We look at a cyclical industry like this partly on its fundamentals. We are always investing when there is a great deal of pain and a great deal of front-page bad news. Clearly, we have that list of woes here, with high jet-fuel prices causing billions of dollars of losses in this industry. What we want to do is focus on companies that we believe are well down the line in terms of bankruptcy risk. In our view, other airlines are much closer to bankruptcy than Southwest or Continental if fuel prices stay where they are. So we focus on companies that -- if they can survive the downturn -- are going to come out much, much stronger. Southwest Airlines is clearly that way. It still has a very low debt-to-capital ratio, and has some strength because it has been able to hedge some of its jet-fuel costs. Also, it can gain pretty much as much market share as it wants, and it continues to be a low-cost carrier. When the industry comes out of this downturn, it will be smaller, and Southwest will emerge with more market share.

6

Two Airline Options Plays to Bank On
Sky-high oil is dragging down airline stocks, but options expert Steve Smith says investors can catch an updraft with Southwest and JetBlue options.

Click here to watch the video.

It never does anything and as an investor, that just isn't enough. It goes up a little then down a little, no excitement.

Weak industry, poor profit margin. Fuel

airline

falls when you expect growth

Best airline, but poor stock performer

slow mover

The airline industry is a terrible place to try to make money, I know I work in it. If a company as well-run as Southwest can't increase their stock price you know the sector is a black hole. Stay away from airlines!

'07, industry,
Fuel costs

Although SW pioneeried the low cost platform they are facing a legacy carrier assault on thier business model which is cloned and intergrated in just about all airlines. In addition to those concerns SW will need to update it's fleet and expand it's routes if it hopes to compete with Continental, and UAL's Ted and UAX.

Makes money, but stock price is stagnant!