Ms. Becker: I do all the airlines and a lot of the freight companies.
TWST: Let's start with the airlines. In a nutshell, what's the status of the airline industry right now?
Ms. Becker: We're going through that interesting point in the cycle where the economy is recovering; people are flying again, especially business travelers. We're definitely seeing an increase in business traffic. We're definitely seeing improved pricing, and we're definitely seeing higher load factors. Generally, our view has been that load factors drive pricing. The higher the load factor, the more likely you would be to get better pricing because airlines have two choices to keep load factors in the 80% range - they have to raise prices or add more capacity. We're at that point right now in the economic cycle where airlines don't want to add more capacity. But if load factors increase towards the 90% range, they're going to have to make that choice. We think initially ticket prices will go up and then longer term, the airlines will have to address the capacity question. This is exactly why we think consolidation would be so good for the industry. We think if the industry doesn't consolidate and we see an increase in more capacity, it would trigger the typical boom-bust cycle of the airline industry. The cycle has terrific passenger and pricing numbers leading to strong revenues during an economic growth phase, and then a decline in traffic and pricing during an economic recession, where airlines literally fly in and out of Chapter 11 bankruptcy protection. We're not currently forecasting another airline will file Chapter 11 this year, as it is early in the cycle.
Tickers included in this excerpt: AAWW, ALK, ATSG, BA, CAL, DAL, DPW, FDX, HA, JALSQ, JBLU, LCC, LUV, UAUA, UPS
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