Continental is downgraded by J.P. Morgan
Firm upgrades Alaska, JetBlue on lower bankruptcy risk









NEW YORK (MarketWatch) -- J.P. Morgan downgraded Continental Airlines to underweight from neutral Monday, citing the stock's valuation.


The investment bank lifted its rating on Alaska Air and JetBlue to neutral from underweight, citing their lower risks of bankruptcy due to record-high jet-fuel prices and their ability to withstand a "war of attrition."
Though investors, management and analysts may talk about airlines acting collectively to reduce capacity to firm up revenue, the reality is that they are more likely to dig in and try to out last each other, according to the J.P. Morgan analyst note.
As evidence, the investment bank noted that capacity cuts thus far have fallen far short of what executives have said are necessary, making bankruptcy -- even among the so-called legacy carriers -- a question of when rather than if.
"There will be blood," wrote analyst Jamie Baker in the research report, forecasting a 2008 operating loss for the industry of $7.2 billion, wider then a prior forecast of a loss of $4.6 billion. That would be an all-time record for the industry, he noted.
J.P. Morgan also listed the airlines it thinks are at Chapter 11 risk, from lowest to highest: Southwest Airlines (LUV:Southwest Airlines Co.
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<IMG class=pixelTracking height=1 width=1 border=0>LCC 7.87, +0.07, +0.9%) .
Further, credit-card companies can represent a much more significant risk to airlines than debt as their ability to impose unilateral holdbacks can exact heavy tolls on liquidity and cash balances, J.P. Morgan said.
Christopher Hinton is a reporter for MarketWatch based in New York

 

what is so "ridiculus" about it?


Here is the rest of the list:
J.P. Morgan also listed the airlines it thinks are at Chapter 11 risk, from lowest to highest:

Southwest Airlines (LUV)
Alaska Air Lines (ALK)
Delta Air Lines (DAL)
AirTran (AAI)
Continental (CAL)
JetBlue (JBLU)
American Airlines parent AMR Corp. (AMR)
United Airlines parent UAL Corp. (UAUA)
Northwest Airlines (NWA)
U.S. Airways (LCC).

Wow, looks like NWA is pretty far down the list. I'm pretty sure the arbitrator will take this analysis into account.

But what happened to the "great balance sheet" they're always bragging about? Remember, DAL needs NWA in order to survive...right, guys?

 

You just couldn't resist a chance of throwing a jab at NWA could you? Do we really need anymore worthless threads thanks to your flame contributions? Whats the point?

 

They could be looking at it as a merger tatic much like the whole AA/TWA debacale.

 

I would like to know what criteria they used to determine this list, who knows how arbitrary it is, maybe the guy writing it owns some stock of the top listed airlines.

 

I admit it was a bit of a low blow...

But seriously, minus the flamebait...how is that possible, given that many people do consider NWA to have decent financials?

 

I dont know i guess it depends on what news "source" you believe. NWA financials are pretty good right now based on cash vs debt ratio. Some will say the financials are better then anyone else out there. Even RA has complimented the financials at NWA. As far as you/I go as pilots we should be more concerned on getting our stuff together and stop the fighting back and forth between pilot groups. Its counterproductive and does nothing to bring us together so that we can move forward as the new Delta.

 

Ideally, that is a great plan in theory. I'd be saying the same thing too, if I was in line for a massive windfall. I'll just leave it at that.

 

Well FWIW i hope neither side gets a "massive windfall". I for one am ready to see this get finished so we can more forward.

 

Yeah, I question the NWA call. Outside of Southwest, I think that they're in the best shape financially. I haven't looked at Alaska's financials, so they may be better than NWA. But NWA's definitely in the wrong place on that list.