The crazy part about the airlines is that the market really isn't interested in large profits as long as the sector faces a reduction in revenue unit metrics. Delta Air Lines (DAL) recently reiterated that Q3 PRASM would decline by 7% while American Airlines (AAL) reported that Q3 numbers are still on a path for a 4% decline at the mid point. The biggest key getting to the positive PRASM numbers are capacity cuts and the general fuel tailwind. Of course, the recent dip in Brent Crude prices don't help with key revenue metrics and fares, but it does help substantially with costs. Depending on where oil prices end up, Delta and American Airlines should approach positive PRASM numbers in Q4/Q1 at which point the market will have a much different opinion on the valuation of the stocks. P/E ratios of 5 and 6 won't last forever. Disclosure: Long AAL