FORT WORTH, Texas -- With the notable exception of Southwest Airlines, U.S. airline stocks have dived so far that some industry financial analysts are beginning to wonder whether they haven't already hit ground.
The impact of a huge increase in jet fuel prices and fears of recession have driven airline stock prices down sharply.
The decline is reflected at Fort Worth-based AMR Corp., parent of American Airlines, as well as at Delta Air Lines and Southwest Airlines.
AMR, which traded at $89.75 a share Sept. 1, 1989, and as high as $107.25 when Donald Trump made his bid for the carrier, closed yesterday at $41.75, down more than 50 percent from Sept. 1 a year ago. Delta, which sold for $80 a share Sept. 1 last year, closed yesterdayat $54.75, down 32 percent in that period.
Southwest, which split its stock 3 for 2 in August, has done the best, closing yesterday at $14.625, down from its Sept. 1, 1989, price of $19.50.
"Southwest has stuck steadfastly with its niche -- close-in airports and heavily traveled routes on non-stop routes," said Lee Howard, chief executive officer at Airline Economics Inc., an aviation consulting concern.
Dismal as those stock performances havebeen, the industry's also-rans have been pummeled.
USAir, whose strength is in Pittsburgh and the Northeast, has plunged 71 percent from just under $55 to yesterday's close of $15.875. And UAL Corp., which traded as high as $294 last year as a group mapped plans for a $300-a-share buyout of the parent of United Airlines, is down about two-thirds to $102.25 yesterday.
"They're selling below book value. Airlines rarely trade below book value," said Barry Gordon, president of American Fund Advisers, a New York investment company that operates the National Aviation and Technology mutual fund.
He said book values -- the value of a company's assets over its liabilities -- traditionally have provided a floor under airline stock prices and, he said, "basically we're there now."
Paul Nisbet, an analyst who follows the group for Prudential-Bache Securities, said, "We expect the jump in jet-fuel prices and slowing traffic due to a sluggish economy to cut earnings for the major airlines dramatically."
Mr. Nisbet's estimates of airline companies' book values include $60 a share for AMR, $50 for Delta and $14 for Southwest. The biggest divergence of a stock price from book value is at USAir, to which Mr. Gordon assigns a book value of $39 a share -- more than twice USAir's stock price.
"The same factor that has created a panic in the broad market is working overtime on the transports, and it's easy to see why," says Stephen Leeb in his investment advisory letter, Indicator Digest.
"Transportation companies are among the nation's largest consumers of oil. So higher oil prices escalate operating costs, reducing margins. And higher airline rates reduce overall passenger travel."
Mr. Gordon said jet fuel prices have risen from about 60 cents a gallon before the Iraqi invasion of Kuwait Aug. 2 to about 92 cents recently.