I saw that Delta had dropped their price on a RT flight to Orlando by 40% since last week (to about $150 from my city), and in looking into them I saw that their stock price looks like it has lost about 50% since sometime in March. Then I looked at the other major carriers and the same thing has happened to them as well. Why?
I know their stock prices dropped immediately after 9-11, but then they mostly rebounded (to about 2/3’s or so at least of pre-9/11 levels) but have really dropped again in the last 2-3 months.
Is stock price and this airline’s “clearance” pricing an indication of it possibly going out of business? I’m a little leary of buying 3-4 tickets for a flight in November and being stuck as a last-in-line creditor for a bankrupt airline.
People aren’t flying.
People are staying away in droves
9-11 made things move faster, but the problems have been building for years.
In a nutshell, airlines treat people like garbage, & the airlines continue to blame 9-11.
So, things are gonna get worse, before they get better.
Bosda - this is probably all true, but why the drop for the airlines in stock price since March?
Did something specific happen?
I think March was a combination of things – it was 6 months after 9/11 so the immediate shock and confusion that affected air travel should have been over by then. It was the beginning of spring, so analysts would have been able to compare seasonal traffic from one year to the next. And while I don’t know the airlines fiscal years, I expect one or more of them would have had quarterly reports (or pre-report analyst meetings) out by then that showed just how deep the problems were.
Historically, except for a few years in the 1990s, airlines have been a terrible investment.
I have the July 1 copy of AviationWeek magazine in front of me, open to the stock performance page. I see from the chart that AvWeek’s airline and aerospace company performance indexes have more or less followed the performance of the S&P 500 index. As the market in general performs, so do the airlines.
Airlines have always been iffy investments anyway. There was a time not that long ago, (and maybe it’s true today) that the airline industry as a whole had LOST money since the dawn of flight.
Which just verifies the old saying: It’s easy to make a small fortune in aviation. Just start with a big one.