What's this? A major U.S. airline eliminating a fee? Hey, it isn't much, but American travelers will take it. And, equally significant, it's another positive data point, albeit a minor one, for the airline sector.
U.S. Airways said it would end its onboard fee for soda, coffee, and bottled water effective March 1, the company announced Monday.
U.S. Airways, which had been the only major, domestic airline to charge for non-alcoholic beverages, said it was dropping the fees because it placed the company at a competitive disadvantage versus other major airlines.
However, the airline will still charge $7 per in-flight beer, glass of wine, or cocktail, the airline said. That's $8 if your martini is shaken, not stirred, like Mr. Bond's. James Bond. (Just kidding!)
Shares of US Airways (NYSE: LCC) rose 30 cents to $3.42 in Monday afternoon trading. The First Call FY 2009/ 2010 EPS estimates for LCC are $2.83 to $3.91.
Further, the company said it still expects to generate $400-500 million in revenue in 2009 from a la carte items, including baggage fees, which remain.
Stock Analysis: Like the other major carriers, U.S. Airways is not a buy here, on the argument that a likely 7-10% reduction in travel revenue from the recession will outweigh cost reductions stemming from increased efficiency and substantially lower jet fuel costs. The bitter/sweet bright side: the airline sector is no longer the worst sector in the U.S. [See: banking, auto sectors.] The unequivocal bright side: the airline sector's capacity cuts have put the major carriers in a better position to withstand the recession, and who knows? With cash flow improving, U.S. Airways may become a Buy in Q2. Stay tuned.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX. Lazzaro owns frequent flyer miles in American Airlines (NYSE: AMR.).
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
