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I was listening to Jim Rogers recently saying he thought air lines are now cheap and he is buying them.

Does anyone else have a view on this? Oil seems really high, a lot of people are talking about holidays locally.

They will probably be around for the long term, but I would have thought it is not a good sector to own. Any thoughts?

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Airline share prices are effectively linked to the oil price. No airline is profitable with oil > $120.

BA, EasyJet and Ryanair are considered the best bets though.

But a prolonged downturn would probably hurt them as much as high oil prices.

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Be careful with smaller ones, they tend to bankrupt often (e.g. Oasishongkong). Stick to larger ones if you have to, best national careers. Also look at Asia - people there will be travelling more as it becomes more accessible.

Large old style airlines are in trouble because they cannot increase prices easily as they are bound by IATA and also provide many unprofitable connections. Flexible low costs are better bet as they cut unprofitable routes, charge many extras (and certainly will find even more ways to charge customers for not necessary necessities such as luggage).

Maybe instead invest in coach companies, such as National Express as they are low cost alternatives to flights?

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Airlines live and die by the oil price. It's going down now, but it's likely the people who control the price will go for another spike next year.

In the longer term, I'd reckon the only profitable airlines will be the middle eastern ones with their shiny new boeings, unlimited cheap oil and space to build vast airport hubs.

BA are pretty solvent, but an economic downturn will hurt their transatlantic business class cash cow.

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  • 399 Brexit, House prices and Summer 2020

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      • down 5% +
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      • Even
      • up 2.5%
      • up 5%

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