SOURCE: Paragon Financial Limited

Paragon Financial Limited

July 10, 2012 08:20 ET

U.S. Airlines Industry Showing Strong Gains Despite Concerns of a Global Economic Slowdown

The Paragon Report Provides Stock Research on Southwest Airlines and Spirit Airlines

NEW YORK, NY--(Marketwire - Jul 10, 2012) - Despite growing concerns of a global economic slowdown the U.S. Airlines Industry has shown investors impressive gains this year. The Guggenheim Airline ETF (FAA) is up nearly 18 percent year-to-date, more than doubling the SPDR S&P 500 ETF (SPY) gain of 8 percent over the same period. The Paragon Report examines investing opportunities in the Airlines Industry and provides equity research on Southwest Airlines Co. (NYSE: LUV) and Spirit Airlines Inc. (NASDAQ: SAVE).

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The International Air Transport Association (IATA) last week reported that global airline companies posted a considerable loss in the first quarter of 2012. The IATA reported that 55 airlines across the world collectively posted a net loss of over $1 billion. The results compare with a post-tax profit of $17 million in the first quarter of 2011. The European and Asian airlines suffered the biggest losses, while U.S. airlines posted a strong profit of $518 million after posting a small loss the year prior.

"The airline industry is fragile," stated Tony Tyler, IATA's director general and CEO. "Relief in oil prices provides some good news. Unfortunately, the softness in oil markets comes on the back of fears of deterioration in the European economy. Business and consumer confidence are falling. And we are seeing the first signs of that in slowing demand and softer load factors."

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Southwest Airlines recently reported that June 2012 load factor was 84.4 percent, compared to 83.9 percent in June 2011. For June 2012, passenger revenue per ASM (PRASM) is estimated to have increased approximately six percent as compared to June 2011. Shares of the company are up nearly 12 percent in the last three months.

Spirit Airlines reported traffic in May 2012 increased 11.4 percent versus May 2011 on a capacity increase of 13.7 percent. The company currently expects capacity to be up 17.0 percent year-over-year for the second quarter 2012, up 23.7 percent year-over-year in the third quarter 2012, and up 22.3 percent year-over-year for the full year 2012. Shares of Spirit Airlines have surged over 40 percent year-to-date.

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