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Southwest Airlines to Purchase AirTran

Southwest Airlines (LUV) logoMore Monday merger fun, this time from the airline sector. Reportedly, Southwest Airlines (LUV) announced that it will purchase AirTran Airlines for roughly $1.42 billion.

This move will be funded mainly with debt, and it will help Southwest establish a larger presence in cities like Boston and New York. What's more (as the article points out), Southwest will now be in "head-to-head competition with Delta Air Lines in Delta's home base of Atlanta."

Continue reading Southwest Airlines to Purchase AirTran

Continental Lifted by Merger's Regulatory Approval

Continental Airlines (CAL - option chain) shares are rising today after the US Justice Department said over the weekend that it has no more antitrust concerns about CAL's proposed merger with UAL Corp. (UAUA). Now the merger only needs to gain approval from UAUA and CAL shareholders as well as the Transportation Department. The deal is expected to close by October 1. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CAL.

CAL opened this morning at $22.23. So far today the stock has hit a low of $22.02 and a high of $25.99. As of 12:20, CAL is trading at $22.09 up 0.29 (1.3%). The chart for CAL looks bullish and S&P gives CAL a positive 5 STARS (out of 5) strong buy ranking.

Continue reading Continental Lifted by Merger's Regulatory Approval

United Airlines is Ready for Take Off

I hope your seat belt is fastened and your tray table is in its full upright position because the parent company of United Airlines -- UAL Corporation (UAUA) -- is ready for take off.

Thanks to a 27% jump in passenger revenue per available seat mile, United just posted its first quarterly profit in three years and its highest quarterly profit in 11 years. The company reported net profit of $430 million, or $1.95 per share -- well above the consensus estimate of $1.77 per share.

Business is looking particularly good in the Pacific and Latin America regions where the company saw growth rates of 52% and 63%, respectively

Continue reading United Airlines is Ready for Take Off

Closing Bell: Blaming Those Greeks (BP, ANN, NBG, GS, CAL, UAUA, AAPL)

Blame the Greeks... Why should today be any different? The fear is that the Greek debt crisis is ready to spread. You have heard it before, and you will continue to hear it again. Maybe this is just the excuse the bears needed to take control. Suddenly, the VIX was back above 25 for the first time since February.

Here were today's closing bell levels:

Dow 10,926.77 -225.06 (-2.02%)
S&P 500 1,173.60 -28.66 (-2.38%)
Nasdaq 2,424.25 -74.49 (-2.98%)

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Continue reading Closing Bell: Blaming Those Greeks (BP, ANN, NBG, GS, CAL, UAUA, AAPL)

United Continental Merger a Sign of Things to Come?

Early this morning, United Airlines (UAUA) and Continental Airlines (CAL) announced that they will join forces to create the world's largest airline in a $3 billion deal.

The new airline will be bigger than Delta Air Lines (DAL) and will send flights as far as Shanghai and South America. The companies believe that the span of destinations should attract more business travelers and their higher fares. The deal, which will need approval from shareholders and antitrust regulators, is expected to close in the fourth quarter. The new company will be known as United Continental Holdings and will be based in Chicago. The airline's largest hub will be located in Houston.

Continue reading United Continental Merger a Sign of Things to Come?

Second Oil Rig Accident Signals a Fundamental Economic Shift?

By now, nearly every person in this country has heard or read about a second oil rig accident which has happened near Morgan City, Louisiana. Although it appears that only a small amount of environmental damage was done, how will the reaction to this news play out in the markets through the coming week?

I'm very thankful that this most recent oil rig accident happened late on a Friday. I certainly believe that if this accident had happened a few hours earlier in the day, I probably wouldn't have liked to witness the way the markets reacted. Now, we have two days to absorb the news of what has happened before full-scale trading resumes. Really, I'm very happy about that.

Continue reading Second Oil Rig Accident Signals a Fundamental Economic Shift?

Strangle Player Bets on a Big Move for UAL Corp.

United Airlines parent UAL Corp. (UAUA) was singled out for a directionally neutral spread strategy on Wednesday, with one options trader betting on near-term volatility for the airline issue. Shortly after the opening bell, a block of 325 contracts changed hands on UAUA's June 24 call for the ask price of $1.32, indicating they were purchased. Simultaneously, a matching block of 325 June 16 puts traded at the ask price of $0.50, revealing these contracts were also bought.

Continue reading Strangle Player Bets on a Big Move for UAL Corp.

Call Buying Climbs on US Airways Group

US Airways Group (LCC) has been in the spotlight ever since word hit the street that the airline was considering a potential merger with UAL Corp.'s (UAUA) United Airlines. Now the shares are attracting even more attention, thanks to an industry report suggesting that average summer airfares could rise 25% on a year-over-year basis.

As a result, LCC's call options have been drawing a crowd. On Tuesday alone, call volume surged to more than double the norm, with 7,345 contracts crossing the tape. During the course of the session, traders on the International Securities Exchange (ISE) alone bought to open 4,129 calls on the airline, compared to just one put.

Continue reading Call Buying Climbs on US Airways Group

United Airlines and US Airways Discussing Possible Merger

On Wednesday evening, reports began to surface that UAL Corp (UAUA) and U.S. Airways (LCC) may be discussing a merger. The New York Times noted that the two airlines are "deep" in merger discussions, which would create the nation's second-biggest airline. According to the report, this is the third time in the past decade that the two have talked merger. Will this time be different?

I honestly believe that this time will be different, in large part because of the economy. As The Times points out, Southwest Airlines (LUV) was the only low-cost air carrier to turn a profit last year. A merger between UAUA and LCC could turn the companies a profit faster than as separate entities.

Continue reading United Airlines and US Airways Discussing Possible Merger

Bears Buy Puts in UAL Corp. (UAUA)

UAL Corp. (UAUA) shares have had quite a 2010, gaining roughly 23% year-to-date and rocketing 17% higher last Tuesday amid a broad rally in the airline sector. Earlier today, the stock hit a fresh 52-week high but has since retreated about 1.5%.

With the stock at historical highs, some option traders are predicting that a pullback is in the offing. The near-term March 15 puts have seen heightened activity today, with nearly 40,000 contracts trading in the first four hours of the session. Heading into today, this out-of-the-money put was home to fewer than 9,000 contracts, suggesting that the bulk of today's volume is being traded to open (and will translate as new open interest tomorrow).

Continue reading Bears Buy Puts in UAL Corp. (UAUA)

United Airlines Buys On-Time Success

The silver lining to the travel slump last year was that fewer flights made it easier for airlines to hit their deadlines. In 2009, the airline sector had its best year for on-time arrivals since 2003, largely because many routes were cut as passenger traffic fell and companies looked for ways to cut costs. According to the Department of Transportation, airlines hit a 79.5% on-time rate last year (which includes flights that were within 15 minutes of their arrival time).

Hawaiian Airlines had the best record, but it's a small regional, lacking the challenges of the major carriers. Among the big guys, Southwest's (LUV) 83% on-time rate was best, and United's (UAUA) 81% was tops for traditional air carriers. Of course, these airlines and the rest of the sector were helped along by the fact that they pad their schedule, which makes it a hell of a lot easier to show up on time.

Continue reading United Airlines Buys On-Time Success

United Airlines Sees Flat Traffic in December

Monday, United Airlines (UAUA) announced that its December traffic matched last year's traffic, but that planes were more crowded. Confused? UAUA had fewer flights this year compared to a year ago, so matching traffic from last year meant that the planes had more passengers.

The air carrier announced that paying passengers flew 9.21 billion miles last month and capacity shrank to 11.24 billion available seat miles from 11.60 billion in December 2008. All this totaled up to average occupancy of 81.9%, up from 79.4% a year earlier. Average occupancy for the year increased to 81.2% from 80.4%. Taking regional operations out of the equation, average occupancy on UAUA flights came in at 83%, up from 79.9% in the prior year.

Continue reading United Airlines Sees Flat Traffic in December

Closing Bell: Santa and Eggnog Preside over Stocks (IBM, BRK.A, UAUA, FNM, FRE AAPL)

Today was a low volume trading day without much economic fanfare as many market participants were out or were talking about the Christmas holiday rather than the markets. The manufacturing output was reported for the Dallas and Chicago Fed Districts, but this in and of itself is rarely enough to heavily influence the markets. There will be more traders around on Tuesday and Wednesday most likely, but then it is likely to peter out again on Thursday ahead of the New Year's Day holiday this Friday. The markets were mixed throughout the trading day, and the real position for an up-close or down-close was something not known until the very end of the trading day.

Here are today's unofficial closing bell levels:

Dow 10,547.30 +27.20 (0.26%)
S&P 500 1,127.78 +1.30 (0.12%)
Nasdaq 2,291.08 +5.39 (0.24%)

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Continue reading Closing Bell: Santa and Eggnog Preside over Stocks (IBM, BRK.A, UAUA, FNM, FRE AAPL)

Delta: Plenty of room for airline industry consolidation

The fact that there hasn't been any action in a while doesn't mean there isn't room for more. Richard Anderson, CEO of Delta Airlines (DAL), says that the airline industry could consolidate further -- not exactly a shock in an industry that is known for universal financial suffering. He notes, "If a transaction were to occur, economics should prevail."

The only concern, of course, is whether the Obama administration would sign off on any future deals. Anderson believes, "I think the case can be made ultimately, but it remains to be seen what this administration's take will be."

Continue reading Delta: Plenty of room for airline industry consolidation

Low cost carriers own 30% of domestic airline biz, growing fast

For years, it's been evident that smaller airlines have had an operating advantage, particularly when they use less expensive airports. They've been able to post better numbers as a result, and in the current travel slump, they've outperformed the larger carriers. Well, they've also picked up a considerable amount of market share.

According to a report by USA Today, low cost carriers now have 30% of the market in the United States. Price-sensitive consumers are turning to cheaper alternatives, even if it means (for fliers with elite status) giving up the perks they've earned through years of customer loyalty.

Continue reading Low cost carriers own 30% of domestic airline biz, growing fast

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DJIA-89.2312,801.23
NASDAQ-23.352,903.88
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Last updated: February 11, 2012: 03:51 AM

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