Western Airlines' Stock May Be Attractive Even If a Takeover Offer Fails to Materialize
The takeover speculation stirring up the shares of Western Airlines is premature, according to some analysts, but the stock may be a good buy anyway.</br></br>Shares of the Los Angeles-based carrier have climbed 50% since the first of the month, and daily trading volume has been over the million mark for more than a week. Friday, the stock closed unchanged at 8 7/8, down just a notch from the 52-week high of 9 1/4 reached Wednesday.</br></br>For more than a year, there has been speculation that a wave of mergers would reduce the airline industry to a handful of major national carriers. Carl Icahn's successful bid for TWA and the People Express acquisition of Frontier Holdings gave the consolidation theory some substance. And Frank Lorenzo, the acquisitive president of Texas Air who failed in bids for TWA and Frontier, is still in the market for an airline.</br></br>Although Western is considered a likely target, many analysts don't expect a major wave of industry consolidation until the next recession. At the moment, Western vows to remain independent, and Mr. Lorenzo in particular might have trouble making a hostile bid for it. The Texas Air president is perceived by many airline industry employees as anti-labor, and Western is 17%-owned by its workers.</br></br>But many analysts think Western's earnings turnaround in itself makes the stock a good buy. This year is shaping up as the company's first profitable one since 1979. Third-quarter earnings, due out today, will exceed the 1978 third-quarter record of $25.7 million, or 65 cents a share, the company has said.