Is It Time to Buy Airline Stocks?

Yes it is, as long as you buy before the airlines report their earnings, according to veteran airline analyst Bob McAdoo.

On Monday morning, McAdoo released a report urging investors to do just that as the nation's biggest airlines prepared this week to present their first-quarter earnings for the year. When the first airline, American, reported surprisingly better-than-expected numbers yesterday, parent company AMR's stock rose about 18 percent for the day.

According to TheStreet.com, McAdoo, an analyst at Avondale Partners, wrote that "airlines are trading as if headed for bankruptcy this year, (but) we believe the various earnings calls will largely dispel those worries."

So what does this mean for Southwest--an airline known more for its successes than for its losses--as it reports losses of $91 million for the first quarter? So far today, the company's shares are taking a beating, down more than 10 percent.


UPDATE: So much for the confidence. With today's reports of first-quarter losses at Southwest and a steep decline in premium traffic globally in February, the Amex Airline Index was down about 3 percent at 11 am. According to MarketWatch, all but two of the Index's components were in the red.