The Airline Sector is Doomed

JPMorgan slashed ratings on the key stocks airline companies yesterday and the stocks fell like a rock. Jet Fuel has increased 24.2% in the last month and 67.9% in the last year, so it's time to short the industry and long the few stocks that will survive.

When you come across a business opportunity, especially if it is related to real estate, use your credit card with caution and do not dissolve your home insurance or life insurance at any cost.

JPMorgan analyst Jaime Baker cut his ratings on seven major airline stocks, blaming uncertainty over the outcome of the proposed Delta-Northwest Airlines combination and forecasting major losses amid fears of a recession.

The industry may be redeemed if oil prices fall, he said, but he called that outcome unlikely.

Jet Fuel costs are out of control, here are the stats from IATA:

Each week IATA updates its jet fuel price index to provide the latest price data from the leading energy information provider Platts.  The weekly index and price data shows the global average price paid at the refinery for aviation jet fuel.

This week's price of aviation jet fuel:

Impact on this year's fuel bill of the global airline industry:

"More likely, in our view, is that oil sits tight but revenue trends reverse," he said in a note. "Even a best-ever recessionary demand scenario results in a $4 billion industry loss."

American Airlines parent AMR Corp., Northwest Airlines Corp., Alaska Air Group Inc., US Airways Group Inc. and United Airlines parent UAL Corp. were all downgraded from "Overweight" to "Underweight."

Yesterday Northwest Airlines Corp. was among the sector's biggest decliners, dropping $1.17, or 9.6 percent, to $11.06. Alaska Air Group Inc. also fell sharply, falling $2.99, or 13.3 percent, to $19.51. No. 1 carrier AMR lost 89 cents, or 8.3 percent, to $9.78.

Baker also downgraded Continental Airlines Inc. and Delta Air Lines Inc. from "Overweight" to "Neutral." His ratings for low-cost carriers, such as Southwest Airlines Co. and AirTran Holdings Inc., remained unchanged.

Southwest, which Baker rates "Neutral," said Tuesday it suspended three employees and hired an expert to review maintenance procedures after the company was accused of flying planes that missed key safety inspections.

Here are the top 20 Airline stocks by market cap, happy trading.

Companies 1 - 20 of about 27 in Airline
Company	Quote	Change	Change%	Market Cap	P/E (ttm)	Ann. Revenue	Ann. Net Income
Ryanair Holdings plc (ADR)	28.88	-0.01	-0.03	8.64B	11.34	3,428.61	664.11
Southwest Airlines Co.	11.70	+0.21	1.83	8.61B	13.94	9,861.00	645.00
Lan Airlines S.A. (ADR)	13.75	-0.05	-0.36	4.66B	14.91	3,033.96	209.73
China Southern Airlines Limited (ADR)	41.08	-2.56	-5.87	3.59B	22.82	6,506.84	30.41
Gol Linhas Aereas Inteligentes SA (ADR)	15.20	-0.39	-2.50	3.07B	49.35	2,937.48	60.98
Delta Air Lines, Inc.	10.52	+0.39	3.85	3.07B	1.96	19,154.00	1,612.00
UAL Corporation	24.05	-0.24	-0.99	2.86B	10.91	20,143.00	393.00
China Eastern Airlines Corp. Ltd. (ADR)	51.19	+1.42	2.85	2.49B	N/A	5,277.79	-515.40
AMR Corporation	9.93	+0.62	6.66	2.48B	5.81	22,935.00	504.00
Northwest Airlines Corporation	9.86	-0.39	-3.80	2.33B	1.71	12,528.00	2,093.00
Continental Airlines, Inc.	21.45	+0.99	4.84	2.11B	5.36	14,232.00	459.00
Copa Holdings, S.A.	33.43	+0.40	1.21	1.44B	9.06	1,027.26	160.41
SkyWest, Inc.	21.21	+0.73	3.56	1.29B	8.52	3,374.33	159.19
Atlas Air Worldwide Holdings, Inc.	53.72	+0.86	1.63	1.16B	8.73	1,562.71	132.42
JetBlue Airways Corporation	4.79	+0.03	0.63	1.07B	52.62	2,842.00	18.00
TAM S.A. (ADR)	17.95	-0.86	-4.57	1.07B	3.46	4,306.87	475.22
US Airways Group, Inc.	8.76	-0.26	-2.88	804.77M	2.05	11,700.00	427.00
Republic Airways Holdings Inc.	20.23	+0.47	2.38	733.98M	9.93	1,292.68	82.76
Alaska Air Group, Inc.	18.60	+0.24	1.31	707.74M	6.15	3,506.00	125.00
AirTran Holdings, Inc.	6.11	0.00	0.00	561.49M	11.88	2,309.98	52.68