Investing in Airline stocks can be a tough business. It’s a sector that I don’t usually follow because I have never been a big fan of them. Sure, there have been opportunities to make some money in the industry over certain time periods but over the long haul it just seems that the only news you hear is that another carrier has claimed bankruptcy.

Friday, Frontier Airline Holdings (FRNT, $0.48, down $1.09) was the latest airline to file for Chapter 11 bankruptcy protection. That’s four in the last two weeks. Although Frontier cited an “unexpected” tightening of its terms with its credit-card processors as the main reason for filing, the real damage is coming from rising jet fuel costs and a slowing economy.

Add the fact that AMR Corp’s (AMR, $9.48, down $0.39) American Airlines canceled more than 3,000 flights last week, this sector is getting more negative press than Eliot Spitzer. You can bet this cost AMR a ton of money and it is estimated that all U.S. airlines combined will post losses of over $1 billion in the first quarter. Staggering.

Even Delta (DAL, $10.01, up $0.26) and Northwest (NWA, $10.96, up $0.09) filed for bankruptcy back in 2005 and over the years there have been numerous others. However, they always seem to come back despite losing so much money. Given the current environment it should come as no surprise that nearly all of the Airline stocks are trading near their 52-week lows. There could be some stocks that eventually trade higher due to restructuring costs and/ or mergers but why invest in an industry that always seems to have a dark cloud above it?

Rick Rouse
Rick@TheOptionInvestor.com