Why have airline and auto companies been such poor investments?
Over my short investing career, I have tended to stay away from airline companies and auto companies. This is because early on in my learning, I always heard that these two industries never made much money.
Although I had heard this many, many times, I never was told why. I feel this way about many things in life; people tell you things, but they don't tell you (or don't know) why.
1) Strong unions. Unions are bad for business
2) Airlines have high fixed costs. So when the economy is booming, they have to take on debt to build more aircraft carriers, and when the economy slows down they have a bunch of empty seats. I have heard that auto companies too have high fixed costs, but that makes no sense to me, since they are selling cars to individuals.
What other reasons?