When oil prices spiked to unprecedented altitudes, airlines were hurting. Oil prices have now plunged — and airlines, which had hedged their fuel purchases at much higher levels, are hurting even more.
So why does Hunter Keay of Stifel Nicolaus Capital Markets think now might be a good time to buy airline stocks?
"These stocks are still very, very cheap," he told CNBC. "They're trading at about two, three times their 2009 earnings estimates; generally, these things tend to trade between seven and eight times forward earnings when they make money, which we think they're going to do next year, and in 2010."
As to those high hedges: "They're going to burn off, so it's a near-term issue," he said. "We think they're going to lose money in Q4, probably lose money in Q1, and then the profitability equation starts to become more compelling."
Who's Keay flying with?