PIGS Sabotage Airline Earnings (FAA)
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Guggenheim Airline ETF (NYSE: FAA) is heading lower Monday as airlines brace for weakening earnings out of Europe. Earlier the International Air Transport Association raised its forecast for European airline industry losses in 2012 from a previous forecast of $600 million loss to $1.1 billion.
"The rest of the world is seeing reduced profitability. For European carriers, the business environment is deteriorating rapidly resulting in sizable losses," Director General Tony Tyler said at the IATA’s summit in China.
The IATA left this year's global airline profit forecast unchanged at $3 billion, or 0.5 percent of industry revenue.
During the conference, Tyler stated business was improving for American carriers, many of which have been keeping a tight lid on capacity.
Last week, analyst David E. Fintzen of Barclays said, "Long-term, we like the industry's earnings growth potential and still see a compelling opportunity in airlines shares, but lower oil admittedly raises the risk of near-term disappointment.”
Barclays' top picks are Southwest Airlines Co (NYSE: LUV), Spirit Air (Nasdaq: SAVE) and Allegiant Travel (Nasdaq: ALGT).
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"The rest of the world is seeing reduced profitability. For European carriers, the business environment is deteriorating rapidly resulting in sizable losses," Director General Tony Tyler said at the IATA’s summit in China.
The IATA left this year's global airline profit forecast unchanged at $3 billion, or 0.5 percent of industry revenue.
During the conference, Tyler stated business was improving for American carriers, many of which have been keeping a tight lid on capacity.
Last week, analyst David E. Fintzen of Barclays said, "Long-term, we like the industry's earnings growth potential and still see a compelling opportunity in airlines shares, but lower oil admittedly raises the risk of near-term disappointment.”
Barclays' top picks are Southwest Airlines Co (NYSE: LUV), Spirit Air (Nasdaq: SAVE) and Allegiant Travel (Nasdaq: ALGT).
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