JetBlue Airways Corp. (NASDAQ: JBLU) is looking to sell 20 million shares of common stock and $150 million in convertible debt. Miserable conditions for the airline industry have led the low-cost carrier to turn to financial markets for the infusion that operations can't seem to deliver.
The debt, which is convertible into common stock, will be sold in two $75 million series. And the 20 million common shares would raise another $101 million (at yesterday's closing price of $5.03). If there's enough demand for the debt and equity securities, JetBlue may sell another 3 million shares of common stock and another $11.25 million in debt.
JetBlue isn't alone in raising capital. US Airways Group Inc. (NYSE: LCC) is planning to ask its shareholders to approve a measure that would double the amount of common shares it could issue to 400 million. The answer will come at the company's annual meeting on June 10, 2009.
What more could go wrong for airlines, right? The swine flu outbreak has reminded some investors of the SARS epidemic in Asia, and it has taken its toll on airlines. With the Mexican government closing schools and stores because of a public health emergency, we await a worldwide reaction. With fears of human-to-human transmission of the disease, no doubt we are going to see airlines suffer again.
Swine flu cases have reached as far as New Zealand, and cases were found in Spain, America and Canada, In the country of origin, Mexico, there have also been deaths, making this a worldwide outbreak. These concerns resulted in battered airline stocks in foreign trading. In Chinese trading, Air France KLM, Deutsche Lufthansa, British Airways, and Iberiea were all more than 7% lower. Cathay Pacific and Air China were both sharply lower as well.
Merriman upgraded Dendreon (NASDAQ: DNDN) to Buy from Neutral on expectations shares will react positively to the full IMPACT data release on April 28. The firm thinks Provenge could represent the first cancer immunotherapy approved in the U.S. and raised its valuation range on the stock to $33-$34 from $18-$19.
Piper Jaffray upgraded Andersons (NASDAQ: ANDE) as it believes the valuation is attractive, investor expectations are low, and the company's fertilizer and rail segments could recovery in FY10. The firm has a $19 target on shares. Goldman upgraded the auto sector to Neutral from Cautious and added Ford (NYSE: F) to its Conviction Buy list. The analyst does not believe Ford will have to declare bankruptcy and sees the company benefiting from Chrysler share declines and GM's (NYSE: GM) reduced product offerings. Ford's price target is $6
Banc of America/Merrill upgraded U.S. Airways (NYSE: LCC) to Buy from Underperform.
Broadcom (NASDAQ: BRCM) was upgraded to Equal Weight from Underweight at Morgan Stanley.
Caterpillar (NYSE: CAT) was raised to Overweight from Neutral at JP Morgan.
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.
A nice little story came out a couple of weeks ago but hasn't gotten much press, what with stimulus packages and "bad banks" and Jessica Simpson's alleged weight gain. Richard Branson, eccentric billionaire and founder of Virgin Atlantic Airways, is reaching out to Captain Chesley "Sully" Sullenberger, the pilot of US Airways Group (NYSE: LCC) Flight 1549, in hopes of putting the hero on the Virgin payroll.
Branson told a New York Daily News reporter, "We'll make him the best-paid pilot at Virgin -- we'll give him double [the salary of] anybody else. He also can become one of the astronauts in my intergalactic spaceship company. The man can write his own ticket with me ..." In response, a flattered "Sully" said he is weighing his options, which recently included a cover shot on People magazine.
Here Come the Tax Cuts The new Congress will hit the ground running on tax cuts. House taxwriters have already approved a big package to help jump-start the economy and get extra money into taxpayers' wallets, and the Senate will follow soon, with the goal of getting a bill to President Obama's desk by mid-February. Here are the tax breaks individuals can expect if the bill passes. http://money.cnn.com/2009/01/26/news/economy/stimulus_101/index.htm?postversion=2009012617
As viewers across the nation watched the remarkable events surrounding U.S. Airways Flight 1549 Thursday -- one in which the experience, skills, and calm of the pilot and crew saved many lives, it occurred to a colleague that the moment was a summary of the nation in these historic times, in a snapshot.
"Between that super pilot and Bernard Madoff we had a picture of the best of America and the worst of America, all within a few blocks of each other," said Stock Analyst C. Leonard Bauer, also a frequent flier whose logged hundreds of commercial flights.
Madoff, for those who are unaware, was arrested in New York on one count of securities fraud on December 11, 2008 for allegedly running a massive Ponzi scheme while managing $50 billion. If he's proven guilty, it will be safe to say Madoff didn't use his talent constructively.
Hudson Hero, American Hero
But US Airways Captain Chesley B. 'Sully' Sullenberger III did. In a case study federal/state aviation officials and analysts will probably highlight for years if not decades, Sullenberger, 57, masterfully guided the 155-person airplane he was flying to a safe landing on the Hudson River bordering Manhattan when the plane lost thrust in both of its engines after birds (possibly a flock of geese) hit the plane shortly after takeoff, apparently clogging the engines. All 155 people (150 passengers, 5 crew members) on board Flight 1549 survived. It's safe to say Sullenberger used his talent constructively.
Bank of America (NYSE: BAC) is getting $20 billion from the government to help it with its purchase of Merrill Lynch. Also, the government will protect an asset pool worth $118 billion. This morning, Bank of America also reported quarterly results, posting a net loss of $1.8 billion for the fourth quarter. For all of 2008, the bank managed to somehow post a profit of $4 billion, which is much less than its $15 billion net income from 2007. Bank of America blamed "escalating credit losses" as well as writedowns and trading losses in capital markets. The bank also reported that Merrill Lynch, which it acquired on Jan. 1 -- after the fourth quarter ended, lost more than $15 billion in the fourth quarter. BAC shares were nearly 5% higher in premarket trading after dropping over 18% Thursday.
Citigroup Inc. (NYSE: C) meanwhile will be guaranteed on $301 billion of assets. Citigroup also reported fourth-quarter results this morning, posting a net loss of about $8.3 billion, or $1.72 per share. Not surprising, it also blamed write-downs and losses in securities and banking, as well as "higher credit losses." For the full year 2008, Citigroup reported a net loss of about $18.7 billion, or $3.88 per share. Finally, Citigroup announced it was splitting into two parts: Citigroup, to handle traditional banking, and Citi Holdings, to manage the riskier assets including brokerage and retail asset management, local consumer finance and a special asset pool. Citi shares were almost 5% higher in premarket trading after dropping over 15% Thursday.
Intel Corp. (NADSAQ: INTC) reported Thursday after the close a 90% drop in fourth-quarter earnings $234 million, or 4 cents per share, compared with $2.3 billion, or 38 cents per share, in the year-ago period. Sales slumped 23%, in line with Intel's previous guidance. Still, the results were inline with Wall Street's reduced expectations. This was enough to have the stock trade 3% higher in premarket action.
US Airways (NYSE: LCC) is recently up 59 cents to $7.98. LCC Airbus A320 plane went down in the Hudson River off of 50th Street in NYC. WTI Crude futures are recently down 6.33% to $34.92 according to Bloomberg. LCC call option volume of 5,703 contracts compares to put volume of 2,905 contracts. LCC February option implied volatility of 131 is below its 26-week average of 142 according to Track Data, suggesting decreasing price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
US Airways flight number 1549 from Laguardia to Charlotte went down around 3:30 p.m., crashing in the Hudson River near 57th Street in New York City. The plane is floating and rescuers are on the scene; it looks as if most of the 148 passengers and crew are being rescued via life rafts. On the news, US Airways (NYSE: LCC) stock was (surprisingly) up 16 cents to $7.55.
Updates:According to an FAA spokesperson, the plane may have been hit by birds. And reports are that everyone survived the crash (which was in shallow water); passengers didn't even get wet.
Minyanville Professor Minyan Peter dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.
As many people have heard before, there are only two times a company issues common stock: When it absolutely has to or when it is stupid not to.
Well yesterday's issuance by US Airways (NYSE: LCC) may represent that once in a lifetime opportunity to see those seemingly contradictory principles in action at the same time. Having seen its stock trade at $1.45 not a month ago, $8.50 must seem pretty sweet to US Airways management, particularly with strong technical resistance at $10.00 providing a pretty strong ceiling above.
With airline stocks trading as the most leveraged play on the price declines in oil, I can understand why US Airways management took advantage of the window being open to issue stock. But just because the issuance window is open, doesn't mean investors should jump.
JP Morgan upgraded AMR (NYSE: AMR), Continental (NYSE: CAL), and US Air (NYSE: LCC) to Overweight from Underweight, according toBriefing.com. The news service also writes that Deutsche Bank downgraded Goldman Sachs (NYSE: GS) to Hold from Buy.
"If there's one sector that stands to benefit handsomely from a further slide in oil or, at least, a moderation in crude's rally: the airlines," explains energy sector expert Elliott Gue.
In The Energy Strategist, he says, "Airlines may make a terrible long-term investment but can be an outstanding short-term trade." Here he looks at Delta Air Lines (NYSE: DAL) and, for the even more speculatively-inclined, US Airways (NYSE: LCC).
"Some investors will rightfully cringe from any mention of this sector; after all, the airlines have consistently lost money throughout their post-deregulation history.
"Most of the majors have declared bankruptcy on multiple occasions since that time. However, we've traded the airlines on a few occasions; we took some triple-digit percentage gains in the airlines back in 2005.
"The airlines' leverage to oil prices is well known. Expectations are so low, in fact, that several major air carriers actually managed to beat consensus expectations in the second quarter.
"And although sentiment is already at rock-bottom, there's a real basis for cautious optimism. First, if I'm right about oil, fuel costs won't rise appreciably in the third quarter. This huge headwind is dissipating.
Your Money: McCain vs. Obama See where the presidential candidates stand on the major economic issues like gas prices, taxes, mortgage crisis, jobs, health crisis and more. Your Money: McCain vs. Obama - CNNMoney.com
If Only Martha Stewart Was a Little More Patient If they only had been more patient investors of ImClone Systems, Martha Stewart and others might have done just fine, and avoided jail time. In a strange twist, ImClone -- the biotechnology company whose stock was dumped just before bad news was announced about an experimental cancer drug -- has received a multibillion-dollar takeover bid pegged to the success of that very same drug. Once Dumped, ImClone Soars - NYTimes.com
JetBlue Airways Corp. (NASDAQ: JBLU) is looking to sell 20 million shares of common stock and $150 million in convertible debt. Miserable conditions for the airline industry have led the low-cost carrier to turn to financial markets for the infusion that operations can't seem to deliver..gif){kind=logo}
What's this? A major U.S. airline eliminating a fee? 
A nice little story came out a couple of weeks ago but hasn't gotten much press, what with stimulus packages and "bad banks" and Jessica Simpson's alleged weight gain. Richard Branson, eccentric billionaire and founder of Virgin Atlantic Airways, is reaching out to Captain Chesley "Sully" Sullenberger, the pilot of 
US Airways
Minyanville Professor Minyan Peter dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit 
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