Airline shares down as oil pierces $70
 

Airline shares down as oil pierces $70 level
Mon Apr 17, 2006 3:11 PM ET

NEW YORK (Reuters) - Shares in JetBlue Airways Corp. <JBLU.O> and Continental Airlines <CAL.N> slid about 10 percent on Monday, leading a decline in airline stocks on concern about crude oil prices breaking the $70 barrier.

JetBlue, a one time investor darling, was down 95 cents, or 9.5 percent, at $9.48, just off a 3 1/2-year low touched earlier in the session. JetBlue shares are down 38 percent so far this year. Continental Airlines <CAL.N>, which has been this year's hottest airline stock, was $3.20, or 11.7 percent lower, at $24.17.

AMR, the parent company of American Airlines, the No. 1 U.S. carrier, was down $2.32, or 9 percent, at $23.58, and the industry-wide Amex Airlines index <.XAL> was down 6 percent, its steepest decline in three months.

U.S. crude oil prices topped $70 on Monday, the highest level in nearly eight months, as Iran's pursuit of its nuclear program heightened fears the U.S. might take military action again the oil-producing nation.

"It's making me nervous," said Ray Neidl, an analyst with Calyon Securities. "Most days it's over $70 a barrel I become very nervous."

"All these revenue increases they're getting are going to be offset by higher oil prices," he said of the airlines, adding that his forecasts had been based on oil prices in the low $60s.

Oil is the second largest expense for most airlines -- which start reporting first quarter earnings this week -- after labor.

Continental, which has rallied this year and is still up 14 percent year-to-date, was also hit by a Lehman Brothers downgrade to "underweight" from "equal-weight."

JetBlue was hit by the higher oil prices as well as a research note from JP Morgan analyst Jamie Baker, who he expected the discount carrier to sell some of its older aircraft or slow deliveries of new planes.

He said the move would be a long-term negative for the stock.

JetBlue declined to comment on the JP Morgan note.

Even Southwest Airlines Co. <LUV.N>, the low cost carrier best protected from high fuel prices by contracts which lock fuel prices in at below-market prices, was hit by the selloff, falling some 5.5 percent in afternoon trading.

The CEO At Exxon just got a $168 million retirement package. I wonder if they had a party and a gold watch for him.
It could be real tough for him to make it on only $168mil.

Oh one other though. Wasn't our current President working in that industry at one time!!

Thats it?....168 million?...:rolleyes:

The VP also got a fat severence package from Halliburton when he decided to resign and run for office. Any coincidence that they have all those no-bid contracts in Iraq and are also posting record profits from their oil intrests?

Exxon, BP, and ConocoPhillips are making record profits, while telling the public that Iran, and Katrina are to blame for record prices.

It's all BS and it's killing the airline Industry....

Sure wish we could start flying hydrogen powered planes. I'm sure turbines would run great on hydrogen but I suppose the tanks would be a problem.

Oil News
Exxon Chairman Gets $400 Million Retirement Package Amid Soaring Gas Prices

April 14, 2006* Soaring gas prices are squeezing most Americans at the pump, but at least one man isn't complaining.

Last year, Exxon made the biggest profit of any company ever, $36 billion, and its retiring chairman appears to be reaping the benefits.

Exxon is giving Lee Raymond one of the most generous retirement packages in history, nearly $400 million, including pension, stock options and other perks, such as a $1 million consulting deal, two years of home security, personal security, a car and driver, and use of a corporate jet for professional purposes.

Last November, when he was still chairman of Exxon, Raymond told Congress that gas prices were high because of global supply and demand.

"We're all in this together, everywhere in the world," he testified.

Raymond, however, was confronted with caustic complaints about his compensation.

"In 2004, Mr. Raymond, your bonus was over $3.6 million," Sen. Barbara Boxer said.

That was before new corporate documents filed with the Securities and Exchange Commission that revealed Raymond's retirement deal and his $51.1 million paycheck in 2005. That's equivalent to $141,000 a day, nearly $6,000 an hour. It's almost more than five times what the CEO of Chevron made.

"I think it will spark a lot of outrage," said Sarah Anderson, a fellow in the global economy program at the Institute for Policy Studies, an independent think tank. "Clearly much of his high-level pay is due to the high price of gas."

Exxon defends Raymond's compensation, pointing out that during the 12 years he ran the company, Exxon became the largest oil company in the world and that the stock price went up 500 percent.

A company spokesman said the compensation package reflected "a very long and distinguished career."

Some Exxon shareholders are now trying to pass resolutions criticizing the company's executive pay policies. The company is urging other shareholders to vote against those resolutions.

I am leaning more toward the Corn Oil extract, seems a little safer and less explosive. I know my next truck will have the corn oil fuel option:)

You'll burn more E-85 becuase more is required to get the same amount of energy. Also, E-85 takes more energy to produce than straight gasoline. I wouldn't bank too much on this technology. It's a stopgap that the farmers are behind but in reality if all the corn produced by this nation was used to make this fuel, less than 25% of the nation's petroleum requirements would be met. If you want something that is really benneficial, go to diesel and run biodesel or get a waste oil conversion. It would probably pay for itself in the first year. Many restaurants would be willing to give you their oil for free simply becuase they're saving money by not having to pay for a recovery firm to come out and get it. While we're at it, support getting rid of regional gasoline mixtures. Go with one or two that are more efficient, like California's. Within 200 miles of St. Louis, 7 different formulas are used based on the season and the states' emission requirements. Go to one, and it reduces costs becuase refineries have to shut down and make adjustments for every fuel.

I think the only way to really do something about this is to come up with real alternatives to gasoline. However, with the profits oil companies are making these days it's pretty easy for them to buy the rights to better technology and horde it for themselves.

Also, what ever happened to efficient engines? I seem to remember cars getting a lot better fuel economy 10 years ago. Now GM touts cars that get 30mpg. That's not great.

Personally, I'll just keep riding my bicycle more, and use mass transit when I can. I'm finding the train ride to the airport is a nice break from reality. I read the paper, or just sit and enjoy the view of all those saps sitting in rush hour traffic, one to a car.