Merrill Lynch cuts American Airlines (AMR), United Airlines (UAUA), US Airways (LCC), Continental (CAL), and Delta (DAL) from Buy to NEUTRAL. What has changed? Fuel prices. (Too bad it took oil hitting $120 for the firm to finally spot this trend: Most of these stocks are trading at about a third of their cycle peaks).
Airlines are a bad business in good times, and in bad times, they go out of business. Which is why we argued yesterday that skyrocketing oil prices will lead to another wave of airline bankrupticies.
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