Of late, we rarely hear any bullish reports about the prospects for this sector. It’s all negative news because of high crude oil prices, etc.

Let’s take a look at the Amex Airlines Index (AMEX: $XAL) in the context of the Investor Sentiment Cycle.

Airlines seem to be in the following phase:

Discouragement and Aversion
After a long price slide, the area where churning takes place is between the Discouragement and the Aversion phase, after a significant decline has already taken place. Often, this appears as a head and shoulders bottom, a cup and handle or a saucer dish pattern. As the public continues to dump stocks, short sellers become bold and bearish. Their views are supported by bad news and poor economic data. Prognostication of lower prices to come is undoubted. This is when everyone knows that the market cannot ever go up again, and that anything, even cash, is preferable to owning stocks.

This is a list of recent financial media stories regarding the airline industry:

• British Airways Margin to Decline in Next Fiscal Year
  British Airways Plc, Europe’s third-biggest airline, said its profit margin will fall in the coming fiscal year because of record fuel costs and a slowing economy.
• Market Spotlight: All-business airlines
  When MAXjet Airways abruptly halted service and headed for bankruptcy on Christmas Eve, it called into question the viability of the budding all-business-class airline model.
• ATA Plans Departure From Chicago Airport
  High fuel prices will force ATA Airlines to leave Chicago’s Midway Airport starting next month, the company announced Thursday.
• ExpressJet Posts Loss on Charges, Fuel
  ExpressJet Holdings Inc. said Monday it swung to a fourth-quarter loss, showing the effects of higher fuel costs and the reduction of capacity under a contract flying agreement with Continental Airlines Inc.
• U.S. Airline Shares Fall After JP Morgan Cuts Ratings
  U.S. airline shares tumbled after JP Morgan Securities Inc.