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Here's an opportunity, imo.
Short Delta, Long AirTran:
Delta Curtails Discounts for Its Corporate Clients
Jump to first matched term
By Nancy Fonti, The Atlanta Journal-Constitution
Jun. 29--The cheapest airfares just got a bit more expensive for Delta Air Lines' corporate customers.
The Atlanta airline is no longer allowing corporations to use negotiated discounts on its lowest-priced fares, travel managers confirmed Friday.
The move, announced in e-mails to corporate clients, comes as Delta and other big carriers struggle with slumping revenue and large losses.
Northwest Airlines had already made a similar change.
Corporations typically negotiate special discounts of 5 percent to 15 percent with an airline on select routes.
In the past the discounts have applied to both expensive full-fare tickets bought at the last minute and deeply discounted fares bought well in advance of travel.
The problem for Delta and other airlines is, for the past year or so, businesses have prodded travelers to buy more of the latter.
That trend factored into a nearly 10 percent decline in revenue per seat-mile at Delta in the first quarter.
In a memo to travel managers, Delta said its top 75 corporate customers spent 35 percent less on tickets in the first quarter of 2002, compared with 2001.
"As a result of a dramatic reduction in published fares, aggressive discounting by Delta in low-end inventory is no longer practical," the airline said.
A spokeswoman declined to elaborate Friday. "It's a matter between us and our customers," she said.
The cheap fares no longer eligible for discounts are similar to fares charged by low-fare carriers AirTran Airways and Southwest Airlines, travel managers said.
"Ten or 15 percent off of a $149 fare is not huge bucks, but if big corporations and travelers use 5,000 tickets a year, that could be significant," said Atlanta travel consultant Chris McGinnis.
"It's total clash of corporations. All corporate travel managers are trying to get employees to use cheap fares, and succeeding to some degree.
"Delta's revenue is weak because of that, and they are trying to recoup some of that money."
Ron Sharer, travel manager for Atlanta-based contact lens maker CIBA Vision, said employees frequently buy tickets 21 or 14 days ahead of travel to save money.
He thinks the airlines should make up their revenue shortfall by lowering unrestricted fares to revive business travel while raising leisure-oriented advance purchase fares.
"We know the airlines are losing money every day, so something has to be done, but there needs to be a total restructuring of airfares," Sharer said.
J.P. Morgan analyst Jamie Baker called the move a "de facto fare increase" and noted the industry hasn't been able to raise fares this year.
"Clearly Delta wouldn't engage in revenue discounts if it didn't think it was revenue-positive," he added.
Citing the airlines' poor revenue picture, bond rating agency Standard & Poor's on Friday cut credit rating on five airlines, including Delta.
Though it went to "BB" from "BB+," Delta's rating remained the strongest of the group.
Ratings for American, United, Continental and Northwest also were cut.
Stop losses:
Longs:
UNTD stop loss sell at 10.60
PHSY stop loss sell at 27
INMT stop loss sell at 10.50
Shorts:
ITMN stop loss cover at 28.30
CAL stop loss cover at 23.40
RevGslick
Hi Bernard. Thanks for the suggestion. I had actually successfully implemented just such a strategy a couple of years ago, however I did not practice the use of stop-losses The 10% of short sales that went against me took away 90% of my profits. I'm thinking of trying it out again with stop losses though. Cheers!
RevGslick
Hi RevGslick, I will say the fastest way to find potential shorts are the most up % issues... a few days later, some of them will become good shorts due to the G-force LOL.
signed,
Bernard
Update Thursday May 30.
Shorts
ITMN - can't break 50MA. Triggered short today at $27
CAL - triggered short at $22.75. Broke out of ascending wedge.
Longs
INMT - Triggered Long at $10.90.
PHSY - Triggered Long at $28.25
UNTD - Triggered Long at $11.20
Closed open orders on:
IVX short - broke upwards instead of down.
MTEC long - broke short-term support. Might be a good short (?)
SIMG long - major breakdown today.
Still Open:
ESRX short stop @ $52.5
Might most some new picks tonight. I'll also be posting my stop losses for entered positions. Cheers
RevGslick
I'd like to add:
ESRX - short stop @ $52
Cheers
Thursday May 30, 2002
My trade setups are all stop orders. I will leave the orders open for max 5 trading days. I'm still experimenting with my strategy & therefore am only paper trading. It's important to create, experiment with & refine a strategy before putting any hard-earned money on the table. Anyways here goes:
Shorts:
ITMN - Sell stop $27.00
IVX - Sell stop $12.50
CAL - Sell stop $22.75
I only had a brief time searching for shorts this evening. More to come shortly.
Longs:
UNTD - Buy stop $11.20
SIMG - Buy stop $10.00
PHSY - Buy stop $28.25
MTEC - Buy stop $37.30
INMT - Buy stop $10.90
I must emphasize that these are very early stages of strategy implementation. I wish there were 30 hours in day so I could spend more time on this :)
RevGslick
Hi RevGslick, nice to see you back here on IH. You might want to tell IH Admin (Matt) to change the title and section of your thread to reflect the current direction. I might not post often here, but I will read what you post if you do post your trade setups here
signed,
Bernard
Hi Bernard and MM,
I'm embarassed because I haven't been able to keep up with the thread. I have been busy with full time school.
What I've learned in the past few months is don't fight the trend! However, my strategy has changed from shorting to purchasing break-out stocks.
On that note, I will attempt to post my current trade set-ups. This thread is therefore open to both short and long trades. The name of the game is make money. How one goes about this doesn't matter.
Cheers
RevGslick
I went through the list of boards and clicked on everything that looked interesting. I think this thread has potential! There's many scalping techniques I hear of occasionally but none of them are suited to me so I just do my own thing.
Regards, MM
Thanks MM, I have all these big board stocks posts all over IH and SI that I can't even remember where did I post them LOL. This thread is over... I guess... I don't know how did you find out this thread LOL
Do you know anything about scalping big board stocks, doing about 100 and 200 trades per day? Assume you pay zero commission. I'm looking in to scalping lately... TIA!
signed,
Bernard
> Shorting EBAY, one freaking huge bubble.
After a 10 day upswing EBAY was still going strong on 12/5/01 when you nailed the top because it hasn't seen that high since then. Amazing.
MM
Hi Bernard,
Generally, I try to stay away from large stocks. Valuations are sometimes irrational but they continue upwards on the value of their name. Be very careful in this market environment also. Although overbought, the market broke through a key resistance today on strong volume. The strong volume is key because it shows conviction on the part of the bulls. Momentum is still on their side and one must wait for it to subside before attempting to short large-cap players such as EBAY. Good luck with your position.
Kev
Shorting EBAY, one freaking huge bubble. EOM
signed,
Bernard
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