For those of you waiting for a pullback in the airlines before loading up, well here’s your chance.
Getty Images Airline stocks are getting hammered today after Lufthansa issued a profit warning. Delta Air Lines (DAL) has, while United Continental (UAL) has, American Airlines (AAL) has and Southwest Airlines (LUV) has.
Cowen’s Helane Becker and Conor Cunningham believe “a buying opportunity finally presents itself.” (Italics there’s.) They explain why:
In our view, the airline stocks are weak today due to the profit warning announcement given this morning by Lufthansa German Airlines and its potential pricing impact from overcapacity on the Trans-Atlantic. We believe fast money is selling into this news despite the demand environment remaining very strong for the US carriers. In fact, May traffic/PRASM results were well ahead of expectations, and Delta, Southwest and American Airlines recently guided numbers up. We believe there is potential for upward revisions to consensus expectations as the demand environment is quite strong. We would be adding to positions on today’s sell off as we believe the summer travel season will be very strong for the group leading to accelerating PRASM trends.
In other words, keep flying the friendly skies.
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