The Precarious Proposition of Airline Stocks: Fool’s Game or Viable Get-Rich-Quick Scheme?

Market analysts broadly agree that airline stock is a poor long-term investment. Robert Crandall, American Airline’s former CEO said of his airline, “It’s a great company that does important work. But airlines are not an investment.” (BTW, you might get a chuckle out of his more colorful comments back in the days of the deregulation debate by googling him). What about short-term though? I submit to you there is a great deal of money to be made, if you gamble correctly.

In July I purchased a sizeable amount of United stock for $3.15/share. The stock closed at $9.72 on Friday and was up to $10.17/share during intraday trading. Selling now would fund my travel for the foreseeable future, but something is holding me back. I got burned when the NASDAQ tanked in 2001 and would hate to see all this potential profit from Untied stock disappear overnight, but the more I study Untied—despite the continued losses, unfunded pensions, and other deficiencies—the more I think that United will prevail and *when* United and Continental merge next year, the stock will climb even higher. If oil unexpectedly rises, however, the stock could tank fast.

I concede that my investment in United is an emotional one, but I hope that emotional attachment is not clouding my judgment on whether to cash in now or gamble a little longer. The house may always win in Vegas, but not in the stock market. I’m holding off selling for now.

^{United’s looking good right now, relatively speaking.} 

^{Photo courtesy TD Ameritrade}

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