Not quite. This guy's take is dependent upon carriers getting further concessions from labor.
Fuel prices aren't expected to dip below a dollar again until next spring.
Further, JetBlue is only now starting to see some of those nasty high maintenance costs that the legacy carriers have been facing for years. The tune will definitely change, but not enough to warrant stock swapping. Either this guy, or someone he knows holds a bunch of AMR/CAL & ALK stock.
************** NEW YORK (CBS.MW) - Analyst Glenn Engel at Goldman Sachs recommends swapping out of positions in low-fare carriers, due to concerns over valuation, and into legacy carriers. Engel feels the margin gap between the legacy and low-fare carriers will continue to close in the second and third quarters. He added that a "gradual easing of fuel prices, encouraging revenue trends, and further labor concessions will give investors greater confidence in the survivability of legacy carriers and create questions regarding the record high multiples of low-fare airlines." He suggests swapping out of AirTran (AAI), Frontier Airlines (FRNT) and JetBlue (JBLU) and into AMR (AMR), Continental Airlines (CAL) and Alaska Air (ALK).
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So the good news is that cost at Jetblue are increasing, putting pressure on them to maybe, increase their prices. Thus, an increase in their pricing would mean that a match on pricing by a legacy would mean a smaller loss. That is good for the airline.
