US airlines deliver biggest gains to patient investors
The Bloomberg US Airlines Index of 10 carriers surged 35 per cent in the first quarter, the best start to a year since at least 1999. Wall Street projects that gains are just beginning for Delta Air Lines and US Airways, both rated higher on average by analysts than 92 per cent of US firms.
Airlines in the United States, shunned by the legendary investor Warren Buffett for almost 25 years, are now rewarding investors with the biggest returns in more than a decade.
Wall Street projects that gains are just beginning for Delta Air Lines and US Airways, both rated higher on average by analysts than 92 per cent of US firms.
After making more than US$58 billion in losses from 2001 to 2009 amid two recessions and rising fuel bills, carriers are heading for a fourth consecutive annual profit as they match seat supply to demand and fly planes fuller than at any time since 1945.
That's drawing new investors, such as Snow Capital Management, while hedge funds are adding to their holdings.
"The same factors that made airlines uninvestable for years - too much capacity, too much debt - are the opposite now and make them attractive," said Simon Rosenberg, a co-portfolio manager at Snow Capital.
"I'm not going to shy away from an industry just because it has a bad history."
