What a week.
We had a slew of airlines report earnings this week — including Allegiant — which posted a stunning revenue performance for the third quarter.
And — everyone else. Who all reported losses to one degree or another. This group included United Airlines, US Airways, Alaska Air Group, AirTran, and JetBlue.
By now you are all probably cognizant of how the markets opened this morning. There was a huge sell off in the Asian markets overnight – and the futures markets were showing such precipitous declines that the NYSE decided to put in curbs before the market even opened in New York this morning.
However, after another rock and roll day, the Dow Jones Industrials closed down only 215.05 points to 8476.20, after having been down as much as 500 points at the opening bell.
Just another fun Friday on Wall Street.
And frankly, these fun Fridays are not going to go away until the Feds begin to address the housing problem.
What? Aren’t they doing that with all that bailout money you and I are now on the hook for? No.
In fact, theoriginal thinking behind the $700 billion plus bailout idea, along with all the moves the Fed has made to increase the willingness of banks to lend money to one another — was that these moves would buy the markets time. Time to sort out the housing debacle.
The root cause of this mess — a housing market that grew out of control on inflated home prices, low interest rates, and greedy banking institutions has yet, however, to really be addressed.
Oh, and yes, I’m sure you also heard yesterday that the number of foreclosures was up 70% in September, year-over-year.
So, to put all the current mess in perspective — the root cause of all of it is still just ….sitting out there.
As for the airlines, it was another bittersweet day.
Bittersweet because the price of oil continues to drop like a rock. Today the price of crude dropped 3.69 to end the day at 64.15. This is the lowest price in 17 months. Meanwhile, N.Y. Harbor Jet Fuel closed the day at $2.08/gallon, down 10 cents on the day.
On the other hand, the vast majority of airline stocks were stung badly today. The reason? The rest of the economic news is so bad.
One of the few airline stocks to post a nice gain today was US Airways. The stocks was up almost 20% on the day at one point, but it drifted back as the day went on. The stock closed up 12% to 7.97. I think analyst comments concerning the airline’s increased liquidity — which the airline disclosed yesterday when it reported earnings — was the key to this uptick.