What's holding the airline sector back, in addition to high jet fuel prices, and keeping the likes of AMR's (NYSE: AMR) American, Delta (NYSE: DAL), UAL's (NYSE: UAUA) United, Southwest (NYSE: LUV), and Continental Airlines (NYSE: CAL) from realizing their potential?
Many economists and analysts would agree that, along with other infrastructure and related investments, the nation's air traffic control system must be upgraded, if the United States seeks an air transportation system capable of maintaining a high level of safety -- and better service -- in the 21st century's more-crowded skies.
Further, that the United States has not already replaced an essentially generation-old air traffic control technology with a modern system is a serious demerit, and one that has -- through delays, cancellations, and other problems -- taken a toll on the flying public and the major carriers.
The unemployment rate is a relatively modest 5.5%. But that's because companies have figured out how to convert full-time employees who have benefits like health care into part-time ones who lack benefits and whose hours can be cut back at will. This is a great deal for companies and a lousy one for workers. And it is ultimately bad for investors.
The New York Times reports that 3.7 million Americans have seen their full-time jobs cut to part-time ones -- the highest number on record (the government started keeping track of this over 50 years ago). This record joins a host of others we've seen this year: record gasoline prices (over $4 a gallon), record Federal budget deficits ($490 billion for 2009), record Federal borrowing ($9.8 trillion soon to hit $10.6 trillion), a record decline in housing prices (15.8%), and a record weak dollar (down 71% to $1.5757 since January 2001 when one euro bought 92 cents).
The newly minted part-time workers are largely Hispanic men. Specifically, the Times points out that 73% of those who were forced into part-time work from the spring of 2007 to the spring of 2008 were men and 35% percent were Hispanic. The industries with the most part-time jobs were construction (28%), retail (14%) and professional and business services (13%).
The Times brings the part-time statistics to life with interviews. Here are two:
Hank Paulson led the charge this morning talking about the need and credibility of the GSE's. Oil was up for a while but after Tropical Storm Dolly headed further south than the oil and gas infrastructure that locked in heavy oil selling. The major focus continues to be earnings and financial stocks in particular. Below are today's unofficial closing bell levels: DJIA 11601.60 (+134.26) S&P500 1276.80 (+16.80) NASDAQ 2303.96 (+24.43) 10YR T-Note 4.097 (+0.03%) 52-Week Lows Top Analyst Calls
American Express Company (NYSE: AXP) was one of the more poor financial stocks today after the company choked on earnings last night. It is also facing deteriorating business despite it being thought of as the highest quality credit card around. Shares were down 9.2% at $37.13 in today's final minutes.
Shares of UAL Corp. (NYSE: UAUA), the parent company of United Airlines, soared today after the Chicago-based company announced it had enhanced its liquidity by $1.2 billion. The company also posted second quarter results that were not as dismal as Wall Street had expected
The company will receive a payment of $600 million from JPMorgan Chase & Co. (NYSE: JPM) related to the advance purchase of frequent flier miles. In addition, the level of reserves that United is required to maintain under its credit card processing agreement with Chase Paymentech has been reduced to $25 million, a move which will free up about $350 million in previously restricted cash. UAL expects the frequent flier payment to improve cash flow by about $200 million over the next two years.
"Combined with the previously announced approximately $550 million raised from new transactions in the second and third quarters, the company will have increased its total cash balance by $1.7 billion and continues to have more than $3 billion in unencumbered hard assets," UAL said in a press release.
Fuel prices seem to be the number one concern on just about everyone's mind lately, and it seems like things are not going to be getting better any time soon. As prices have risen to record levels, many of us have decided to cut back on our driving, especially on long trips in order to save a little on our fuel prices. Well, the airlines are no different, and there's an interesting report today in The Wall Street Journal showing how airlines are cutting back on long flights in order to save a little on fuel consumption.
It is a pretty nasty cycle we are seeing with the airlines. The higher fuel costs have led to higher tickets prices and extra fees. These higher prices have led to less air traffic, and that has led to an even greater need to find more ways to cover rising costs. Definitely a tough situation.
The new way they are starting to combat the high costs of flying is by cutting back, or postponing long international flights, in particular flights that are in excess of 12 hours.
MOST NOTEWORTHY: Concur Tech, Groupe Danone and General Motors were today's noteworthy downgrades:
Piper downgraded shares of Concur Tech (NASDAQ: CNQR) to Neutral from Buy after transferring analyst coverage, as they believe potential upside to estimates is priced into shares while competitive concerns from American Express (NYSE: AXP) are not.
Morgan Stanley downgraded shares of Groupe Danone (OTC: GDNNY) to Equal Weight from Overweight to reflect reduced visibility in the company's core business.
Merrill downgraded General Motors (NYSE: GM) to Underperform from Buy citing the company's deteriorating US auto sales, resulting in a higher cash burn, which could result in a larger than expected capital raise. The firm believes GM capital raise could be in the range of $15 billion and notes that bankruptcy is "not impossible."
OTHER DOWNGRADES:
Progenics Pharma (NASDAQ: PGNX) was lowered to Underperform from Market Perform at Friedman Billings.
UAL Corp. (NASDAQ: UAUA) was cut to Neutral from Buy at Goldman.
Brand-Name Stocks Uner $10: Buyer Beware These well-known names in the bargain bin may look appealing, but experts advise laying off until their earnings picture is clear. Among the stocks to be weary of are Sprint Nextel, Motorola, Ford Motor, Qwest, Washington Mutual, Northwest Airlines, Del Monte, Rite Aid, Chico's, Crocs, United Airlines, Palm, Sealy, Blockbuster, Circuit City and Orbitz. Brand-Name Stocks Under $10: Buyer Beware
NYSE Euronext (NYSE: NYX) will pay $250 million in Qatar's Doha stock exchange, the Doha Securities Market (DSM), in return for a 25% stake. It makes sense for NYX to expand into the Middle East as that region is becoming more financially influential.
Nokia (NYSE: NOK) is paying $410 million to buy out the rest of Symbian, a maker of operating systems for mobile phones. This move, announced just as Google (NASDAQ: GOOG) said its Android system will be delayed, could help Nokia as it becomes more entrenched in the marketplace. While Microsoft's (NASDAQ: MSFT) Windows Mobile operating system is Symbian's closest rivals, its still new kid Apple Inc. (NASDAQ: AAPL)'s iPhone that captures the interest of many.
United Airlines (NASDAQ: UAUA) said Monday it will cut about 950 pilot jobs out of its 6,600 pilots beginning this summer. The airline has already announced cutting 1,600 salaried positions and reduce its fleet. UAUA shares, already sliding nearly 15% Monday, continue to decline in premarket trading as airlines will likely stay in focus.
Farm Stocks: Pick of the Crop Millions of acres of farmland may be under water, but some agricultural outfits stand to benefit as higher prices lead to demand for seeds, equipment, and fertilizer. They include Archer Daniels Midland, Mosiac, Potash Corp., Agriam, Monsanto and John Deere. Ag Stocks: Farm Favorites Millions More Could Get a Rebate If They File a Return Even as the IRS has sent out nearly 77 million tax rebates, more than 5 million retirees and disabled veterans who may qualify for a rebate haven't received one because they haven't filed a tax return. Millions more could get a rebate if they file a return - USATODAY.com
Stock futures were lower early Friday as investors seemed concerned about oil prices ahead of a weekend summit in Jeddah, Saudi Arabia. Meanwhile, financials kept the headlines this morning with Washington Mutual and airlines announcing jobs and cost cuts the main story there. It appears that the last day of this week might see some losses before heading into next week and the Federal Reserve meeting.
On Thrusday, stocks managed to finish the session higher after wobbly trading as oil prices dropped and Citigroup announced further writedowns. The Dow industrials ended 34 points, or 0.28%, higher, the S&P 500 added 5 points, or 0.38%, and the Nasdaq composite climbed 32 points, or 1.33%.
As there are no economic reports due today, investors will eye oil prices after crude-oil futures declined $5 a barrel Thursday following news that China is raising retail fuel prices starting Friday. As countries reduce subsidies for gas, many believe it could slow demand. This morning, oil prices traded a little higher at mid $132 per barrel.
5 Stocks Dad Will Love Forget ties. For Father's Day this year give him something of real value -- shares of some great companies that make products men love. They include O'Reilly Automotive, The Stanley Works, Diageo, Dick's Sporting Goods and Best Buy. 5 Stocks Dad Will Love - Kiplinger.com
Is Water the New Oil? By 2030 nearly half of the world's population will inhabit areas with severe water stress. In the coming decades, as growing numbers of people live in urban areas and climate change makes some regions much more prone to drought, water -- or what many are calling "blue gold" --will become an increasingly scarce resource. Billionaire T. Boone Pickens thinks water is the new oil -- and he's betting $100 million that he's right. If he's right, T. Boone Pickens is a modern-day John D. Rockefeller. Pickens owns more water than any other individual in the U.S. and is looking to control even more. There Will Be Water - BusinessWeek
No, the airlines haven't started charging by the pound. At least not yet...
Jokes aside, nobody told the airlines there'd be days like these, to paraphrase John Lennon.
Jet fuel costs -- up 84% in the past year alone -- have skyrocketed, along with the cost of just about every other product derived from the world's most vital commodity, and the airlines are looking for every conceivable way to reduce weight, reduce wind/resistance drag, and increase operational efficiency, The New York Times reported Wednesday.
The major carriers are replacing heavier seats with lighter ones, cleaning engines and planes more often, reducing the fresh water available on flights, and plugging into electric outlets instead of idling engines at the gate, among other changes, in order to cut fuel consumption.
More air travel changes ahead
Moreover, the changes -- and charges -- have only just begun, so says stock analyst C. Leonard Bauer. "Everyone knows about the added bag charges, a pain in the neck, for sure. But it could get worse," says Bauer, who also flies on a major carrier about 5-7 times per year. "In the winter you could see a per pound baggage charge, or something along those lines. So don't pack that extra winter coat when you fly this December."
Bankruptcy Odds Watch What are the odds that General Motors will have to file for bankruptcy by the end of the year? 30-in-1. What about American Airlines? 2-in-1. Check out 24/7 Wall Street's Bankruptcy Odds Watch on 10 popular companies and what the odds that Northwest, United Airlines, Wachovia, Ford Motor and more will file for bankruptcy. 24/7 Wall St.: The 24/7 Wall St. Bankruptcy Odds Watch
Small Companies, Big Brands Take a look at 10 overachievers that became breakthrough success stories. See how they made their products a household name. They include Ciao Bella, Clif Bar, John Fluevog Boots & Shoes, Pirate's Booty, The Republic of Tea and more. Small Companies, Big Brands - BusinessWeek
What's holding the airline sector back, in addition to high jet fuel prices, and keeping the likes of AMR's (NYSE: AMR) American, Delta (NYSE: DAL), UAL's (NYSE: UAUA) United, Southwest (NYSE: LUV), and Continental Airlines (NYSE: CAL) from realizing their potential?
The unemployment rate is a relatively modest 5.5%. But that's because companies have figured out how to convert full-time employees who have benefits like health care into part-time ones who lack benefits and whose hours can be cut back at will. This is a great deal for companies and a lousy one for workers. And it is ultimately bad for investors.
Here are some highlights from this past week's 
Shares of 
Fuel prices seem to be the number one concern on just about everyone's mind lately, and it seems like things are not going to be getting better any time soon. As prices have risen to record levels, many of us have decided to cut back on our driving, especially on long trips in order to save a little on our fuel prices. Well, the airlines are no different, and there's an interesting report today in The Wall Street Journal showing how .gif){kind=logo}
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