He likes the airlines and expects the US economy to expand. The number of US airlines have shrunk a lot, down to four, but they are mispriced to their relationship to loyalty-point cards. Delta signed a deal with AmEx where Delta believes they will have $7 billion in excess cash flow by 2023. That's pretty good. Everybody loves loyalty points to buy seats. It benefit consumers and airlines which have done a great job of upselling. Fuel prices have been a concern, but the oil price has remained low. Even if the economy heads into recession, Delta's balance sheet is lean and mean.
He likes the airlines and expects the US economy to expand. The number of US airlines have shrunk a lot, down to four, but they are mispriced to their relationship to loyalty-point cards. Delta signed a deal with AmEx where Delta believes they will have $7 billion in excess cash flow by 2023. That's pretty good. Everybody loves loyalty points to buy seats. It benefit consumers and airlines which have done a great job of upselling. Fuel prices have been a concern, but the oil price has remained low. Even if the economy heads into recession, Delta's balance sheet is lean and mean.
(A Top Pick July 18/17 - Up 8%) Oil prices seemed to have stabilized, they are charging 30 dollars now for a checked baggage. They are returning capital. The risk is if the economy falls down. He sees a lot of upside still based on valuations.
(A Top Pick July 18/17 - Up 8%) Oil prices seemed to have stabilized, they are charging 30 dollars now for a checked baggage. They are returning capital. The risk is if the economy falls down. He sees a lot of upside still based on valuations.
Is this time different for airlines? They've consolidated and they say they won't fight each other about capacity this time. Delta and the others look pretty good now. But rising oil prices forced Delta to issue guidance to limit expectations. This is trading at 8.5x earnings. He thinks this time is indeed different for the airlines. Delta generates a lot of money from its credit cards (air miles). Good dividend and they're buying back stock.
Is this time different for airlines? They've consolidated and they say they won't fight each other about capacity this time. Delta and the others look pretty good now. But rising oil prices forced Delta to issue guidance to limit expectations. This is trading at 8.5x earnings. He thinks this time is indeed different for the airlines. Delta generates a lot of money from its credit cards (air miles). Good dividend and they're buying back stock.
It's as good as any airline. Good 11% return on invested capital. Now's a good time to buy airlines, despite abysmal longer-time history.
It's as good as any airline. Good 11% return on invested capital. Now's a good time to buy airlines, despite abysmal longer-time history.
Doesn't own any airlines right now. Had looked at Air Canada (AC-T) which had an incredible year last year. You could come up with a million and one issues of why you would never want to own an airline, but at the same time you could make an argument that you are in the sweet spot of a cycle for the airlines.
Doesn't own any airlines right now. Had looked at Air Canada (AC-T) which had an incredible year last year. You could come up with a million and one issues of why you would never want to own an airline, but at the same time you could make an argument that you are in the sweet spot of a cycle for the airlines.
