Get ready for the old good news, bad news routine when the airlines start reporting first quarter earnings on Tuesday morning.
The good news: This will likely be the most profitable first quarter ever for the airline industry.
The bad news: Every carrier will warn of potential problems and earnings hits in the second quarter due to FAA sequester cuts.
For investors, this represents an interesting dilemma. Do they stay with airline stocks that have risen 25-45 percent in the last year just as they head into the busy summer season or do they sell ahead of potential problems with sequester delays? It all comes down to how much you believe the FAA delays will truly hurt bookings and earnings this summer.
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Delta, US Airways and Hawaiian Lead the Way
The start of the airline earnings season will include two carriers expected to post a profit in the first quarter. The first quarter is historically the slowest three months of the year for airlines because it lacks major holidays and traffic.