December 2, 2007
Dear Mr. Berko: I bought 100 shares of US Airways in March at $52 and the stock is now $21.21. I read that JP Morgan and Goldman Sachs have recently recommended the stock. Why are they recommending US Airways now?
I was going to take a tax loss in December but wonder if I should keep the stock based on its "upgrade" by four of Wall Street's major brokerage houses. And I was also wondering if you think I should buy 100 more shares and bring my cost basis down to $40? Please advise me.
B.E. Port Charlotte, Fla. Dear B.E.: Perhaps one of the worst reasons to purchase a stock is because several of the major member firms of the New York Stock Exchange upgrades the shares. Today, the shares of US Airways Group are trading at $21.21 so it's not unthinkable that the big boys would sell into their recommendations. Those guys are always out to feather their own nests.
Years and years ago, before the war in Iraq, before the Tech Bubble, when the dollar was figuratively worth its weight in gold, before the i-Pod, the i-Mac and the Blackberry, Trans World Airlines' stock symbol on the New York Stock Exchange was TWA. Its service and scheduling was so bad that travelers suggested TWA was an acronym for Try Walking Across.
The New York Stock Exchange symbol for US Airways is LCC and its current price is off slightly from this year's January high. LCC's service is "boon" bad, its arrival and departure times are wild guesses at best and by the time your luggage arrives on the carrousel you could have had a drink, a steak dinner and dessert. And it's no wonder that Mingo Jones Jr., a former White Weld analyst, told me that LCC is an abbreviation for Lousy Common Carrier.
LCC's stock price has crashed over 60 percent since its January high of $62 while the prices of other common carriers have fallen about 25 percent. High fuel costs have impaired LCC's earnings as well as the earnings of its competitors. Still LCC should earn about $5.60 in 2007 and if the company doesn't implode, earnings in 2008 are projected to come in between $4.30 and $4.60 a share.
But those earnings are not the reason that JP Morgan, UBS, Merrill and Goldman Sachs have upgraded their recommendations on the stock. They believe that its drastic drop in market value makes the company an attractive marriage partner. And these crazies believe that LCC is worth $42 to $46 a share as a dowry.
But I wouldn't go within a 100 yards of this carrier even if I were wearing a biohazard suit. There's something pathetically and pathologically wrong with this airline that's "gate-late" about 70 percent of the time. US Airways is a Burger King compared to the Savoy in Paris, a Yugo compared to a Cadillac and a duck compared to an eagle. LCC's aging and fuel-guzzling fleet should be decommissioned and parked in Arizona's Sonora Desert Airplane Graveyard. And at least 57 percent of LCC's intentionally slothful employees, including management, ought to be terminated and given applications for positions at Burger King. Even after its silly merger with America West, which resulted, supposedly, in $800 million of operating improvements, unit cost at LCC still greatly exceed those of other carriers. In fact the merger will result in a substantial increase in labor cost thanks to union contracts.
Management's ridiculous new proposal for pilots will cost an additional $125 million, almost 25 percent of last year's operating profits. The collective IQ of LCC's management is still preceded by a minus sign! Consider management's new reservation system, which is the Mother of All Failures.
Web site glitches, huge goofs in its frequent-flyer program, terribly confusing data-entry instructions and check-in complications are just a few of LCC's reservation problems. And not even heaven can help you if you need employee assistance at an LCC airport reservation counter. Mingo Jones Jr. tells me that he always takes 10mg of Valium when he is forced to fly LCC.
Earlier this year, Delta management considered a merger with LCC partly because of US Airways's impressive and attractive nationwide route system. However, Delta, sensing that LCC's stick-house infrastructure could implode as it has several times in the past, got smart and passed. And another possible merger notwithstanding, I suggest that you do the same.
Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, FL 33429 or e-mail him at [email protected].
Dear Mr. Berko: I bought 100 shares of US Airways in March at $52 and the stock is now $21.21. I read that JP Morgan and Goldman Sachs have recently recommended the stock. Why are they recommending US Airways now?
I was going to take a tax loss in December but wonder if I should keep the stock based on its "upgrade" by four of Wall Street's major brokerage houses. And I was also wondering if you think I should buy 100 more shares and bring my cost basis down to $40? Please advise me.
B.E. Port Charlotte, Fla. Dear B.E.: Perhaps one of the worst reasons to purchase a stock is because several of the major member firms of the New York Stock Exchange upgrades the shares. Today, the shares of US Airways Group are trading at $21.21 so it's not unthinkable that the big boys would sell into their recommendations. Those guys are always out to feather their own nests.
Years and years ago, before the war in Iraq, before the Tech Bubble, when the dollar was figuratively worth its weight in gold, before the i-Pod, the i-Mac and the Blackberry, Trans World Airlines' stock symbol on the New York Stock Exchange was TWA. Its service and scheduling was so bad that travelers suggested TWA was an acronym for Try Walking Across.
The New York Stock Exchange symbol for US Airways is LCC and its current price is off slightly from this year's January high. LCC's service is "boon" bad, its arrival and departure times are wild guesses at best and by the time your luggage arrives on the carrousel you could have had a drink, a steak dinner and dessert. And it's no wonder that Mingo Jones Jr., a former White Weld analyst, told me that LCC is an abbreviation for Lousy Common Carrier.
LCC's stock price has crashed over 60 percent since its January high of $62 while the prices of other common carriers have fallen about 25 percent. High fuel costs have impaired LCC's earnings as well as the earnings of its competitors. Still LCC should earn about $5.60 in 2007 and if the company doesn't implode, earnings in 2008 are projected to come in between $4.30 and $4.60 a share.
But those earnings are not the reason that JP Morgan, UBS, Merrill and Goldman Sachs have upgraded their recommendations on the stock. They believe that its drastic drop in market value makes the company an attractive marriage partner. And these crazies believe that LCC is worth $42 to $46 a share as a dowry.
But I wouldn't go within a 100 yards of this carrier even if I were wearing a biohazard suit. There's something pathetically and pathologically wrong with this airline that's "gate-late" about 70 percent of the time. US Airways is a Burger King compared to the Savoy in Paris, a Yugo compared to a Cadillac and a duck compared to an eagle. LCC's aging and fuel-guzzling fleet should be decommissioned and parked in Arizona's Sonora Desert Airplane Graveyard. And at least 57 percent of LCC's intentionally slothful employees, including management, ought to be terminated and given applications for positions at Burger King. Even after its silly merger with America West, which resulted, supposedly, in $800 million of operating improvements, unit cost at LCC still greatly exceed those of other carriers. In fact the merger will result in a substantial increase in labor cost thanks to union contracts.
Management's ridiculous new proposal for pilots will cost an additional $125 million, almost 25 percent of last year's operating profits. The collective IQ of LCC's management is still preceded by a minus sign! Consider management's new reservation system, which is the Mother of All Failures.
Web site glitches, huge goofs in its frequent-flyer program, terribly confusing data-entry instructions and check-in complications are just a few of LCC's reservation problems. And not even heaven can help you if you need employee assistance at an LCC airport reservation counter. Mingo Jones Jr. tells me that he always takes 10mg of Valium when he is forced to fly LCC.
Earlier this year, Delta management considered a merger with LCC partly because of US Airways's impressive and attractive nationwide route system. However, Delta, sensing that LCC's stick-house infrastructure could implode as it has several times in the past, got smart and passed. And another possible merger notwithstanding, I suggest that you do the same.
Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, FL 33429 or e-mail him at [email protected].
