“To be sure, different groups within the transportation sector reacted differently. Airlines, for example, did not break down, and even set a nine-month high earlier this week. Lower fuel costs did indeed help their performance,” according to Barron’s.
Airlines are also paying down debt while free cash flow is rising. Debt as a percentage of operating revenues has declined to 41.4% in 2014 from over 65% in 2010. Free cash flow is expected to rise over $15 billion this year from close to zero over the past couple of years.
The industry is also enjoying greater ancillary revenue, or revenue from sources outside of passenger tickets, such as baggages, food, beverage, rentals and wifi, among others. Global ancillary revenue has increased to $31.5 billion in 2013, compared to $2.45 billion in 2007. [Airline ETF Looks Good]
iShares Transportation Average ETF
