NEWS: Better Financials for Airlines in 2006?

The whole airline sector dogged it all the way through 2005 but Lehman Brothers airline analyst Gary Chase thinks 2006 will be better. He notified client that they have raised price targets for many airlines, including legacy airlines, noting that "a recent disconnect between energy prices and airline shares" has created "upside opportunity." Perhaps what Mr. Chase points to is simply an investment opportunity based on share price but I would not take it as a revelation that airlines are set to get back on track in 2006. Click Read More! for my opinion on the matter.

The airline business model in the US has not changed in any significant fashion. Most airlines still feel the best way to combat profit stifling fuel prices is to whine about them continuously and loudly in the hopes that the government will give them a handout. If that doesn't work the next best option is to file for bankruptcy, clear out the labor contracts, shove new lease and debt terms down everybody's throat and then exit so they can pick up where they left off. All they have done is cut costs and that is not enough to support their penchant for capacity dumping and fare battles in the name of "preserving" their market share. What good is market share if the prices in that market are so depressed that you can't make money. Its a vicious circle and I, for one, am dizzy. Please stop the ride.

So sure, maybe there is some Wall Street market play to be made here, but that has nothing to do with the health of the industry.