Sep 16, 2005 7:06 am US/Central
Bankrupt Airlines' Trading Volume Increases
Atlanta, Ga. (AP) ―
Despite having filed for bankruptcy, shares of both Delta Air Lines and Northwest Airlines have seen big increases in trading volume, indicating that some investors still see opportunity.
Both airlines filed for bankruptcy protection Wednesday, each citing billions of dollars in debt.
But on Thursday, 53.8 million shares of Atlanta-based Delta changed hands, breaking a trading volume record of 35.6 million set Aug. 15. Shares closed up at 75 cents.
Northwest Airlines also saw a volume increase at 132.8 million shares, a daily gain of 69 percent. The stock closed down at 88 cents.
Analysts say it is difficult to know who is doing the trading, but Standard & Poor's airline analyst Jim Corridore said trading in a newly bankrupt company is not unusual.
"Whenever a company files for bankruptcy, investors speculate that the stock has fallen so much it will go back up eventually, although there's no evidence this will happen," Corridore said.
Day traders can always make money on small changes in share price. Also, investors covering short positions in a stock add substantially to buying volume. Shorting is the sale of borrowed stock that is expected to decline so it can be repurchased at a profit.
But Bruce Bittles, chief strategist for Robert W. Baird & Co., said the high volume was not significant, noting the low price for Delta shares.
"Anyone can buy a thousand shares at that price," Bittles said. "It's not like you're buying Google."
Internet search engine Google closed Thursday at $302.62.
(© 2005 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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