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Tickers in this Article: JBLU, CAL, BA, AMR, DAL
Airline stocks are holding up relatively well. A quick look at a chart of Continental Airlines (NYSE:CAL), JetBlue (Nasdaq: JBLU) AMR Corporation (NYSE:AMR), and Delta (NYSE:DAL) will show that each is trading near its 52-week highs. But despite that, there are many reasons to remain skeptical.

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The Aerial View Remains Cloud Covered
Yes, the domestic economy is showing some signs of recovery, and yes, there is some news to cheer about. Specifically, early this week JetBlue announced that its traffic in the month of March was up 9.1%. But I question whether the future, particularly in the near to intermediate term will be blockbuster. Think about the number of things that could impact demand for air travel. Oil/fuel prices as we all know can pinch an airlines margins and ultimately ticket prices, and oil prices have been rising. This could end up being a negative. The fact that unemployment remains so high and corporations remain cautious about hiring is also likely to weigh on travel plans as well. Not to mention that interest rates could soon be on the rise and higher taxes could be in the cards for many Americans. (Learn about factors that affect oil prices in our article, What Determines Oil Prices?)

A Bargain Or a Trap?
There isn't much to rave about on the airlines earnings front. JetBlue is expected to earn just 38 cents this year, which isn't all that impressive with the stock over $6. AMR Corporation is expected to lose 52 cents a share this year, which is hardly exciting for a stock that trades north of $9. Continental does seem like a better bargain. It is expected to earn $2.13 a share this year, which means it trades at about 10.9 times that estimate. Meanwhile Delta trades at about 9.5 times this year's estimate, which is $1.52. But again, my thinking that consumers are likely to be tight fisted when it comes to travel leaves me concerned that those companies may have a tough time achieving a more lofty multiple.

What about carry-on baggage? Spirit is reportedly going to charge for some carry ons and if it becomes a major trend in the industry, it could be a turn off for some travelers and inspire some to instead take to the car or stay close to home.

Boeing Could Have Wings
Rather than air travel, I'd much rather do my homework on Boeing (NYSE:BA), which makes airplanes and has a military side of the business. Longer-term I see BA being more resilient. I also see the company as being a large winner on the earnings front because over time the demand for pleasure and business travel should increase as the economy recovers.

Bottom Line
Airline stocks may be holding up well. But near-term to intermediate term macro concerns make me feel that they are not a bargain. If interest rates rise and taxes increase as I expect, the odds are we will see many families stay close to home and maintain a tight grip on their wallets and budgets for travel.

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