US Airways Group Shares Popped: What You Need to Know
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of US Airways Group (NYS: LCC) jumped 17% today on a slew of good news for the airline.
So what: The company announced that September unit revenue will grow an estimated 13% from a year ago, as demand remains strong and capacity is reduced. Delta Air Lines (NYS: DAL) and AMR (NYS: AMR) , parent of American Airlines, also said they would reduce capacity going into the end of this year and 2012.
Now what: The supply reduction is partly in preparation for a possible recession, but if a recession doesn't come it should mean more profits for airlines. Airline earnings ebb and flow with ticket prices and fuel costs, so great news today may vanish tomorrow. I would take a cautious approach to today's news because of the volatility in airline stocks. But maybe, just maybe, the big operators have figured out how to operate their businesses profitably for the long term.
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At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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