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Contrarian Investing: Finding profits in cheap airlines

Posted April 16, 2008

“Now that the airlines are on the verge of collapse once again, I’ve realized there is opportunity in this beaten-down sector. Airline stocks are falling across the board, and the contrarian inside me is starting to get interested.” — Andrew Mickey

by Andrew Mickey

Baltimore – (TFN): I’ve always considered airlines to be, hands down, the easiest way to lose money in the markets.

An industry with strong unions, a high degree of government regulation (some of it certainly justified, like safety), and competition willing to take large losses to maintain market share just doesn’t get me interested.

And yet, now that the airlines are on the verge of collapse once again, I’ve realized there is opportunity in this beaten-down sector. Airline stocks are falling across the board, and the contrarian inside me is starting to get interested.

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Andrew Mickey is a regular contributor to Taipan Daily, your FREE resource for late-breaking investment opportunities to help you beat Wall Street to the profits.

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When stocks go on sale and fear is running rampant, that’s when I think about becoming a buyer. Right now there is no perhaps no bigger firesale than the one going on in the airline sector. This perpetually cash-strapped industry is on the verge of yet another round of bankruptcies… and this time the problem is far bigger than declining ticket revenues.

The problems run deep. Simply charging an extra $5 for a meal or hawking some designer sunglasses for $200 apiece isn’t going to save the airlines. A renegotiated contract with the pilots’ union isn’t going to help much, either. These cost-reducing activities just delay the inevitable.

The United States airline industry is truly on the brink. As it stands, things could get bad enough for the government to step in and just run the whole deal. If you think delays and cancellations are bad now, you haven’t seen anything yet. Read on to learn how you can profit from the crashing airline industry.

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