U.S. Department of Transportation Tentatively Approves American Airlines & British Airways Alliance
The Department of Transportation has tentatively approved American Airlines, British Airways and fellow Oneworld Alliance partners Iberia Airlines, Finnair and Royal Jordanian Airlines bid to expand their trans-Atlantic operations. According to thestreet.com, the proposed agreement would create a unified network of about 500 possible destinations in more than 100 countries. The carriers can jointly price, market and schedule international flights in their alliance without committing any antitrust violations that could lead to prosecution, provided that they agreed to cede to rival airlines four pairs of takeoff and landing slots at the United Kingdom’s Heathrow Airport.
American Airlines, a subsidiary of AMR Corp., British Airways and Iberia Airlines intend to create and operate a joint venture between the U.S., Mexico, Canada, the European Union, Switzerland and Norway. The obvious benefits of this alliance include lower fares on more routes for customers and better schedules. The alliance could have a negative effect on competition on some routes between the United States and Heathrow airport. The deal could also give the partners a dominant market position on routes between Heathrow and U.S. destinations like Dallas-Fort Worth, Boston and Miami. Alliances have become a viable alternative for air carriers who are struggling amid a downturn in air traffic. Many carriers are scrambling to reduce operating costs and are actively seeking new revenue streams.
There are similar trans-Atlantic partnerships in operation such as Lufthansa, Continental Airlines, United Air Lines and Air Canada of the Star Alliance and some members of the SkyTeam, Air France-KLM and Delta Air Lines. The Department of Transportation is allowing for a 60-day comment period before it makes its tentative approval decision final.
PetMed Express is a Good Defensive Addition to any Stock Portfolio
PetMed Express, on online pet-prescription retailer, has increased profit for 11 consecutive quarters and has been called a model of consistency. According to thestreet.com, during the last three years the company, based in Pompano Beach, Fla., has boosted revenue 15% annually. This is a good addition to the portfolio of any investor looking for a defensive play, especially in this economic climate.
PetMed is off to a good start in 2010, after it hit a speed bump last October following the release of fiscal second-quarter results. The stock has rallied eight percent in 2010, as the Dow Jones Industrial Average tumbled 3.7% and as the S&P 500 fell 4.2%. PetMed’s fiscal third-quarter net income jumped 14% to $5.6 million and earnings per share climbed 19% to 25 cents. The company’s operating margin has held steady at 17%.
PetMed, which bills itself as America’s largest pet pharmacy, market capitalization is $442,300 million and its shares closed Friday at $19.35, with a P/E ratio of 17.26%. The company pays a dividend yield of 2.07%. With the spending on pet medicine expected to increase over time, PetMed is well positioned to participate in any increase in the pet medicine market as a whole, as well as gain market share. The company, despite the United States being in a recession, attracted 802,000 new customers in 2009 vs. 710,000 in 2008. It is also highly unlikely that pet owners, who use PetMed, will actively shop around for pet medicine. The company, which is a market leader with the lowest prices, offers its customers a quick and easy platform for repeat purchases.
On Feb 5th, I saw Jim Cramer’s “Mad Money.” For the record I think Jim’s show is great (that’s right we are on a first name basis). It is rare to find a financial show that can educate and entertain on a consistent basis and Jim has clearly mastered this.