'Fundamental' Changes Allow Airlines to Take-Off: CEO
By: Typically when oil prices go up, airline stocks go down. But this recovery has been very different.
The airline industry seems to be going through a 'rational recovery' — meaning there are no new airlines selling seats at a loss to gain market share — for the first time in many, many cycles.
"What I would like investors to understand is that we actually do get it," Doug Parker, chairman and CEO of US Airways, told CNBC's "The Strategy Session" on Thursday.
"There have been fundamental changes made in this business," he said.
"Consolidation is a huge one that has made an enormous difference beginning with the USAirways, America West merger, followed by the Northwest, Deltamerger, now the United, Continental merger, the Southwest AirTran merger...," Parker said.
"Our goal was always to get the industry more rational and I think we've played a large role in that with our own merger as well as helping compel some of the others," he said.
"I am not about to suggest that rising oil prices are good for the business. It's gonna increase our cost, but what I know is, because of the changes we've made over the last couple of years in this business, we can withstand this," Parker said.
An aviation analyst said on Thursdaythat the airlines are betting that oil will correct itself, so they are staying away from hedging.
"What the analyst is actually saying to investors is, this could be good because what it might do is force these airline executives to actually do what's right for investors instead of what they've done in the past," he said.
Watch CNBC's "The Strategy Session" weekdays at Noon ET.