Two Takes On Airlines For Next Year Ahead Of New ETF Launch

Remember the uproar over the airline baggage fees a few months ago? Apparently, we’re living with it just fine and the forthcoming airline exchange traded fund (ETF) probably won’t be affected by it after all. In fact, the outlook for airlines is on the rosy side, according to two analysts.

The uproar when the changes were announced was deafening. And even the concerns over people bringing inappropriate items as carry-ons hasn’t been much of a problem. Instead, people are adjusting. Of course, after traveling this holiday weekend, passengers might change their minds about that.

But fewer people are checking two bags, leaving the average number of items checked around 1.2 per passenger.

Both Virgin America and JetBlue (JBLU) are among the holdouts, giving passengers one free checked bag. Southwest (LUV) still allows two free checked items. The easiest way to avoid any fees, check-in hassle and lost luggage, though, is to travel light.

Two analysts are forecasting the airline industry to perform well in 2009. Bob McAdoo with  Avondale Parters says capacity cuts in the industry along with falling oil prices have come at a good time. Fewer seats will make up for the lower demand among travelers, says Jon Bruner for Forbes. McAdoo notes to watch the oil prices - is the cost dropping faster than the revenue stream shrinks?

Kevin Crissey with UBS is a little more bearish on airline for 2009, but sees some positives. While the airlines got burned hedging high fuel prices after commodities collapsed, the numbers should begin to show improvement with lower fuel prices in the long run.

Posted in Categories: Airlines, Contributor, ETFs, External Research, Stocks, USA.

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