Dear Mr. Berko: I just sold 100 shares of Procter & Gamble, which I bought at $91 in 2017. They’re still $91 each. I’d like to buy 200 shares of Delta Air Lines because my UBS stockbroker recommends it.
— PR, Kankakee, Ill.
Dear PR: If only you had waited a few weeks. P&G is now $99. And your UBS broker is a bonehead. I’d never own an airline stock.
It began some 20 years ago, when Northwest Airlines reckoned it could save $500,000 a year by cutting its limes into 16 pieces rather than eight. Then Northwest lost its mojo in 2005 and was forced to merge with Delta (DAL-$52) in 2007. American Airlines followed, removing one olive from each salad in first class, saving the carrier $40,000 each year. Lamentably, Eastern Air Lines, Pan Am, Braniff, TWA, United, US Airways and others didn’t cut their limes and expunge their olives. Airline stocks are usually among the worst-performing longterm investments man can make. Since 1979, more than 80 passenger carriers have declared bankruptcy. Some years ago, Warren Buffett, an unhappy airline investor, told CNBC’s “Squawk Box” that he calls an 800 number every time he gets an urge to buy an airline stock and that the person on the other end talks him out of it.
DAL’s executives realized that the more uncomfortable passengers are, the more money DAL earns. I was 6 feet, 6 inches tall before back surgery, weighing 240 pounds. For me, fitting into a Delta bathroom is like jamming my size 13 feet into size 10 shoes. DAL now employs chiropractors on flights. If you’re having trouble fitting in a Delta bathroom, don’t assume you’re putting on weight. On Delta’s 737-800s, bathrooms measure 39 inches by 24 1/2 inches by 77 inches. Narrow as an arrow! The bathrooms shrank by more than 10 inches from the sink to the opposite wall and shortened by 2 to 3 inches from the back of the toilet to the door. The smaller bathrooms, combined with a smaller galley and trimmer seats, allow DAL to install an extra row of seats. Based on average fares and usage, DAL figures it’ll generate an extra $400,000 a year for each seat it adds to a plane. DAL says that adding these seats to its Boeing 737-800s and its Airbus A321s could improve revenues by $500 million a year. Avoid Delta!
