This constitutes multiple 'rays of light:' United Airlines (UAUA) Tuesday announced that it would acquire 50 new planes. Twenty five are The Boeing Company (BA) 787 Dreamliners and twenty five Airbus A350 XWBs -- widebody planes with a list price of $9 billion, CNNMoney.com reported. And Wednesday Delta Air Lines Inc. (DAL) and United indicated that business travel is improving and that the worst of the travel demand slump was over, Bloomberg News reported.
Bloomberg also quoted American Airlines parent AMR Corp.'s (AMR) Treasurer Beverly Goulet as "seeing improvement in both leisure and premium traffic at this point." She added that domestic markets appear to be recovering at a slightly faster pace than international markets.
Economic Analysis: The news did not move United's, American's, or Delta's stock much Wednesday, but the important point for investors is that the above data points represent another sign of demand in the U.S. economy: airline traffic appears to be firming, and it may have bottomed. Further, United's acquisition of 50 new commercial airplanes is also encouraging: no airline wants to take delivery of a plane that they know will sit unused most of the time. Hence, at this juncture, it appears three major carriers expect increased activity in 2010 -- another constructive sign for the U.S. economy.
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Reader Comments (Page 1 of 1)
12-10-2009 @ 12:54AM
Terry said...
The airlines are buying new planes because the current fleet is falling apart from age. United recently announced that they are remodelling their entire fleet. The current fleet is somewhat like travelling on an old Greyhound Bus. A few new planes do not mean the slump is over. Business travel is still down and the only reason the planes are flying full now is because the airlines have cut the schedules and number of available aircraft to bare bones levels.