Which Airline Stock Will Die?

So far, no one seems to like the bailout. No one, that is, except the executives and employees of companies poised to lose the most if the bailout fails.

Airlines rank near the top of the list. They depend on credit for equipment financing, the derivatives and futures markets for fuel hedges, and equity to pay their people. An illiquid credit market would mean death for at least one of the major carriers.

Who would be first? Meet the five worst domestic airlines, in order, as determined by our 115,000-plus Motley Fool CAPS community:

Worst Airline Stocks

Recent Price

CAPS Stars

(out of 5)

One-Year Return

US Airways (NYSE: LCC  )

$3.63

*

(88.5%)

AMR Corp. (NYSE: AMR  )

$6.67

*

(73.5%)

Northwest Airlines (NYSE: NWA  )

$6.56

*

(67.6%)

Delta Air Lines (NYSE: DAL  )

$5.66

*

(71.1%)

Continental Airlines (NYSE: CAL  )

$10.95

*

(70.7%)

Sources: CAPS, Yahoo! Finance.

Jim Cramer would probably tell you to sell them all. He may be right. But, for now, I want to focus on the one that our Foolish stock pickers say is the worst: US Airways.

"I just hate this airline! The employees are surly and if there is any other choice I take it. Plus, I'm in airports a LOT and hear this from most other travelers when the subject comes up. Not good in this time," wrote CAPS investor tweaks in August.

Charging $1 for coffee and $2 for Coke will do that. Look, I get that US Airways and every other carrier has to do what it must to make ends meet, but this nickel-and-dime approach to making a profit feels way too much like the street corner down-and-outer whose day is spent begging for spare change.

Customers would rather save money by staying home. "Decreased gas prices may help but nobody is going anywhere for a while. Vacations are going to be piling the kids in the car and heading out to beach with a couple peanut butter and jelly sandwiches. Good times," says CAPS All-Star TommyHopp.

And let's not forget labor problems. US Airways has had as many as its peers, although you might argue that United has it even worse. To be fair, though, UAL's (Nasdaq: UAUA  ) pilots opposed a proposed merger with US Airways in May because of service issues.

Neither carrier is flush, nor are any of their peers. What sets US Airways apart is its reputation as a cheapskate that provides subpar service. That's sustainable if you're Southwest (NYSE: LUV  ) , the airline that promises you nothing more than a smile and a ride. US Airways, like its legacy peers, used to be much more than that, and fliers don't seem to like what it has become -- a home to sky-riding cranky characters brought to life by righteous anger and who, as a result, are on the verge of killing what's left of this once-golden goose.

But that's my take. What's yours? Do you think US Airways will be the next airline to fail? Let us know by signing up for CAPS today. It's 100% free to participate.

Taxi toward related CAPS Foolishness:

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. He hunts for the best of tech as a member of the Motley Fool Rule Breakers team. Here's how to try this market-beating service free for 30 days. Get access to all of Tim's Foolish writings here.

The Motley Fool's disclosure policy, after 15 years on the job, is still rising.


Read/Post Comments (7) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 10, 2008, at 3:31 PM, usflyer wrote:

    Tim, you are an idiot!!!

    You are correct! That is your opinion.

    I have flown on this airline for years and have had NOTHING but great service. You try putting up with the likes of you and you would be cranky too.

    People say that front line employees will make an experience. Well, people who think they deserve first class treatment on a $99 fair are delusional. If you cannot afford to pay $1 for a cup of coffee you have no business flying in the first place!!

  • Report this Comment On October 10, 2008, at 4:02 PM, n2flyin wrote:

    Dear Author: I would be embarrassed to write such an article. You've taken one "fact," combined with with a bunch of hearsay and ended up with a complete "Dis US Airways" article.

    Are you worried about your job? Had a deadline to make?

    No, there's lots of good things about USAirways. You would be better served to pay attention to those things some time.

    I think you need to re-check just who is and who is not the "surly" one around here.

  • Report this Comment On October 10, 2008, at 5:04 PM, LoadandHold wrote:

    And the stock went up 27% percent today...clear evidence that you are an idiot.

  • Report this Comment On October 10, 2008, at 10:00 PM, desertflyer wrote:

    To be a "Talking Head" is one thing, but to be a talking head without factual basis is a crime. In September USAirways had their highest load factor for that month in over 10 years! In August, USAirways was in the top three airlines for on-time arrivals, baggage completion, and low customer complaints. Having just ridden USAirways four times in the past two weeks I found their service to be a value. Tim, if you give out free Cokes in your business, please send me your address as I'm on my way to collect!

  • Report this Comment On October 11, 2008, at 12:47 PM, Peaceful12 wrote:

    Hi,

    First I should say I want your job. No research, no facts, no work. Just think something, write it up and you have an article, not a good article, not even one worthy of printing but you have something in print. The response from desertflyer at least attempts to give a factual account of the state of this airline. The reality is this airline has made a turn around and I am regular passenger and have very few compliants but I also have a few complaints about the other airlines I fly.

    Seriously if you are a journalist then you need to put in some WORK prior to printing an opinion that is so obviously biased and without factual evidence.

  • Report this Comment On October 12, 2008, at 6:32 PM, contrail7 wrote:

    You peaople need to wake up and smell the $2.00 a cup coffee. US Airways WAS a great arline prior to the America West merger. US Airways is a shadow of the great company it once was. Its stock is crap, its employees unhappy, I should know I am married to a 25 year employee from the REAL Us Airways. Management has driven a once proud airline into the ground. And as far as "facts go" Peaceful12, Look at the latest Forbes poll rating airlines, guess who , again, is rock bottom. United-US Airways. I'm sorry but it is withful thinking that this carrier has better than a 50/50 chance to survive.

  • Report this Comment On December 07, 2008, at 12:30 PM, totdodkotj wrote:

    I fly a lot, and since I am paying for the tickets, usually at the lowest fare available. (Despite some redemptions, over 800K FF miles in the bank.) Here's my rankings based on service experience:

    1. Virgin Atlantic

    2. Southwest

    3. British Airways

    4. Continental

    5. American

    6. Lufthansa

    7. United

    8. US Airways

    9. Air Tran

    I did not include airlines I haven't used recently and frequently. I gave up on NorthWORST long ago, haven't flown Delta in a while. The domestic carriers have much better service internationally than domestically - almost like a different company.

    Since air travel (especially domestic) has become a commodity the way to compete is service. (Service sells!) If I were required to invest (thankfully I'm not) in US carriers I'd have to pick Southwest and Continental. They seem to have fewer grumpy/poorly trained employees and more cheerful passengers.

    By the way the majority of my banked FF miles are with United the rest are in three other plans.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 750340, ~/Articles/ArticleHandler.aspx, 9/23/2014 4:30:09 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement