The airline industry has recently received extensive press with the Boeing 737 Max crash and subsequent grounding of crafts. There are also concerns over the cost competition brought about by low-cost carriers. Furthermore, they can be vulnerable to oil price and geopolitical events.
CNBC was reporting a few weeks ago (in April) that analysts predicted Airline stocks could still rally another 20% this year.
In the long-term, analysts expect millennials who value experience to help bolster the airline industry.
Westjet Airlines (WJA-T)
Onex put a bid in to acquire the carrier, and regulators should approve the deal. They have been coming out with better numbers and guidance in the last quarter.
It’s under review by the government whether the takeover will take place. You’re dealing with regulatory uncertainty right now. If you bought it before the takeover, unless you’re in tune with what will happen, he wouldn’t own the stock any longer. The price is fair.
Air Canada (AC-T)
The largest airline in Canada. A well run company. They are in exclusive talks to buy Air Transat since May of this year. They experienced some problems with the Boeing 737 issue.
Need to be patient over next year or so. Lots of cash on hand, so they'll survive. Highly cyclical. Starting to inch its way up. Once we start to see normalcy in travel, could do very well. Small position only in this, and depends on your risk tolerance and time horizon.
Chorus Aviation Inc (CHR-T)
They operate Air Canada Jazz. The new agreement with them will run for 17 years. They pay a good dividend and are doing very well with a big profit margin.
They are in a tough situation with the pandemic. They don't own them at this time. They are in a partnership with Air Canada that provides a block amount of flight time, which was creating great certainty. The other side of their business is the leasing side, which was being looked at fueling growth. It…
Transat .A. T. Inc (TRZ.A-T)
Transat is in exclusive acquisition talks with Air Canada and the outlook is very positive.
Canada Jetlines Ltd (JET-X)
A Canadian ultra low-cost airline out of Vancouver that is just getting off the ground. They recently announced that they successfully launched their system for ticket sales.
Want to wait for them to start flying, to see if they can do it. It’s not an easy business. Comes down to management. You might be OK, but there are easier ways to make money.
Southwest Airlines (LUV-N)
The world’s largest low-cost carrier. They pay a good dividend. They are moving into more longer range flights and moving out of their traditional shorter range flights.
American Airlines Group (AAL-Q)
Price competition has been tough for American Airlines and the stock price has been volatile. They recently extended their 737 MAX fllight cancellation period.
Spirit Airlines Inc. (SAVE-N)
An ultra-low-cost carrier from Florida. They are 7th in the commercial airline sector in the US. Low fuel costs have improved the bottom line significantly. They are anticipating a capacity growth of 13% in 2019, year-to-year.
(A Top Pick March 23/15. Down 37.65%.) Had thought this would do better. It had the benefit of very low oil prices at that time, and was an ultra low cost carrier, which was attractive, and it was winning share. Started to have problems operationally. It is going to take time to repair some of…
Delta Air Lines Inc (DAL-N)
The company is doing well and ordering premium economy seats that will boost revenue. They have good free cash flow too. The company intends to continue buying back shares and raising dividends.
UAL-Q or DAL-N. The airlines are the most prominent businesses that suffered directly from COVID and it is difficult to know when it will improve. Most of these companies have raised money recently. Both score poorly on most metrics he looks at. He would prefer AC-T over these two as it is liable to get…
United Continental Holdings (UAL-N)
An airline holding company that owns and operates United Airlines. Their earnings are growing and revenues per available seat mile is also up 4.3% since last year.
All airlines are cyclical but he thinks the time is particularly ripe with this one. Their earnings are growing. Revenue per available seat mile has grown 4.3% last year. They are 200 basis points ahead of all of the other airlines. The airlines are a good opportunity and this one is a particularly well managed…
Stock prices have been struggling since the 737 Max crash. They are trading at 23x forward earning which is considered quite expensive. However, they are in a duopoly and demand for transport is strong. It will not go up in the short-term but worth holding.
If Biden wins He can see China making a huge purchase of Boeing planes. If so, Boeing shares would roar (also would roar if it gets approval for the 737 Max).
JetBlue Airways Corp. (JBLU-Q)
An American low-cost carrier and the 6th largest in the US. The company hopes to double earnings by 2020. They are in the final stages of their program to cut costs in maintenance and airline staff.
Skywest Inc (SKYW-Q)
A holding company that operates SkyWest Airlines and ExpressJet. Their cash outlook is great and are considered undervalued right now.
A European aerospace corporation. They have a backlog of orders and China seems to favor Airbus over Boeing. They bought the CSeries program from Bombardier last year that should create more lightweight planes.
(A Top Pick Aug 19/19, Down 40%) It's been severely affected by the pandemic and the subsequent collapse of air travel. We're starting to see some recovery. It's in a duopoly in the aircraft business so it is a good market to be in the longer term. With a 5 year time horizon, it should…