Frontier Comes Out on Top for the Quarter

Allow us to gloat a little bit about our stock pick.
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OK, Wing Tips followers. This is one of those days I like to refer to when some poor misinformed soul says to me, "Airline stocks? You analyze airline stocks? You can't make money trading airline stocks."

Silly people.

Today is the day we look back at last quarter's airline performance. And what do we see? An airline stock we first recommended as a strong contender last August and then strongly recommended again in January --

Frontier Airlines

(FRNT)

-- taking top honors for the quarter.

With the help of a nice 10% uptick Wednesday, shares of the Denver-based airline pulled off a double for the quarter right at the line. Closing at 9 7/8, the stock ended up posting a 105% return for the quarter.

But wait, as those

Ronco

ads say, there's more!

Of the top five performers for the quarter, we pointed you in the direction of three. To celebrate, I think Wing Tips is going to go get a

Godiva

chocolate Easter egg. Then we are going to eat it. Then, after that ritual is over, we'll talk about those recommended airline stocks that did not do so well for the quarter.

But first, let's extend the good stuff as long as we can and look at the top performers in terms of their stock prices.

The top five airline performers for the first quarter of 1999, along with their percentage gain vs. the fourth quarter were: Frontier Airlines, 105%;

AirTran

(AAIR)

, 60%;

Southwest Airlines

(LUV) - Get Report

, 34%;

Delta Air Lines

(DAL) - Get Report

, 33%; and

United Airlines's

UAL

(UAL) - Get Report

, 30%.

Here is a rundown of the top five airline stocks for the quarter, in addition to the balance of the major airline stocks:

OK, so now that we have hauled out the trumpeters and had them play the appropriate herald and we've eaten the last of the chocolate egg, let's bring in the reality check. Alas, we do need to look at where we did not do so well in the first quarter. And where the sector as a whole had problems.

It does not take long to figure out which group of previous performers stumbled the hardest this quarter. Yes, the usually invincible regional and commuter sector, for the most part, was grounded.

In fact, the biggest loser for the quarter of all the airlines we track was none other than

Mesaba Holdings

(MAIR)

, holding company for

Mesaba Airlines

, the regional/commuter feeder for

Northwest Airlines

(NWAC)

. This stock lost 35% on the quarter. Splat.

Shares of

SkyWest

(SKYW) - Get Report

, which has been a favorite of ours for some time, also stumbled this past quarter, losing 12% to end the quarter at 28 7/8. However,

Comair

(COMR)

, the top regional fave for us this past quarter, did manage to post a gain of 6% on the quarter, ending the day Wednesday at 23 5/8, and shares of

Atlantic Coast

(ACAI)

were up 13% to close at 28 1/8.

What happened here? In the case of Mesaba, there was good news and bad news. The good news is that Mesaba's revenues and earnings are closely and irretrievably tied to those of Northwest Airlines, and the airline basically performs a fly-for-hire type of operation. All upside and little downside risk. The bad news about this is, well, it is a contract with Northwest Airlines.

Since the pilots' strike last fall, load factors for Northwest have still not returned to the levels they were at this time last year. Consequently, Mesaba has not flown as many passengers.

There is also speculation regarding how many of the new regional jets that Northwest just recently ordered will be flown by Mesaba. Northwest was purposely coy about the issue, rather than saying up front that Mesaba would be given the lion's share of flying.

In the case of SkyWest, the airline is caught in the middle with both United Airlines and Delta Air Lines. The regional airline has had a code-sharing arrangement with both United and Delta for over a year, but indications are that SkyWest is moving toward a United-only deal. Delta is not happy about this. There is much denial going on in all three camps.

Result? This stock has not had a good quarter. We hope the decisions involving SkyWest are decided soon, so that the airline can concentrate again on making money. Our bets are, and have been, that SkyWest will go with United exclusively and Comair will take over the current routes that SkyWest flies for Delta out of Salt Lake City.

Next week, we'll look at quarter ahead and update you on what we see happening next.

WingTips' notebook:

Yes, it is good to be back on Thursday! As most of you know, I ran off and started the

Traveling with Wings

column last November here at

TSC

. And while the response to that column has been very positive, it became obvious that it was also taking too much time away from Wing Tips. And after all, Wing Tips is the one that brung me here, as they say.

As a result, this Saturday will be my last Traveling with Wings column (although I am sure I will be over there occasionally -- they can't get rid of me that quickly!). Going forward, you will once again see me here on a more frequent basis. Thanks much for the notes pushing me in this direction. I finally saw the light.

Happy Easter, everyone!

Holly Hegeman, based in Dallas, pilots the Wing Tips and Traveling With Wings columns for TheStreet.com. At time of publication, Hegeman was long Southwest Airlines, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. You can usually find Hegeman, publisher of PlaneBusiness Banter, buzzing around her airline industry Web site at

www.planebusiness.com. While she cannot provide investment advice or recommendations, she welcomes your feedback at

hhegeman@planebusiness.com.