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Are Great September Traffic Numbers Just The Beginning For American Airlines?

When Delta reported September traffic the market shrugged it off as a one-off but when American reported September traffic it jumped 6.74%.

The current investor frame of mind has decoupled the mirror image moves of oil and airlines.

The quality of earnings in the airlines industry makes me think it is a valuation play and want to be in it through options as opposed to the underlying stock.

When I saw my call option in American Airlines (NASDAQ:AAL) skyrocket Friday I knew the airlines were a winner. The company reported an increase in September traffic which sent the underlying shares higher by 6.74%. Oil has spiked up over the past week and one would anticipate that the airline stocks would drop, but that just hasn't been the case this week. Is it time to be worried about the airline sector now after potentially more gains in the commodity that propels airplanes from Point A to Point B?

I actually don't feel that will be the case, as the airlines have been hammered mercilessly this year to the same tune that oil has been beaten up. Earlier this year the airlines were down on capacity concerns as they have been adding capacity, but those concerns have been alleviated now as American Airlines just showed with the increased traffic in September. One should anticipate that since their input costs have come down for the year that the stock prices of airlines should rise, and vice versa. But I believe we are at a point now where the two have been decoupled from one another.

I for one have been flying quite a bit lately thanks in large part to the lowered ticket prices which are primarily due to the lower fuel prices. There were capacity concerns initially in the middle of May when quite a few of...


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