14 Airline Stocks Flying High in 2019
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.
You can pick away at the airlines, but there are cost pressures like labour and fuel. The demand for summer travel will offset that with consumer spending their excess cash on experiences. Buy a bit now then maybe add more in June or July.
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.
It is earning enough to re-instate the dividend but management would like to accumulate retained earnings for now due to the balance sheet not being quite where they want it. Trading close to book value. Based on current earnings the fair market value is 100% above the price. If it goes above the price then…
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.
It used to be best of breed, but it suffered operational issues last year (the pilots union nearly mutinied). The CEO has stepped down, but he will wait till they report Thursday.
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.
Last Thursday, AA forecast they'll return to 93% of pre-Covid capacity this quarter with total revenue up 6-8% compared to 2019--better than pre-Covid. Won't say when they will return to profitability. Are cleaning up the balance sheet and spending to increase capacity. He prefers Delta and United, but likes AA.
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.
Management recently offered very bullish commentary. They returned to profitability at 10% operating margins, and expect revenues to return 95% of their last pre-Covid quarter; March 2022 saw their strongest month for flight demand. Delta can pass higher oil prices onto customers.
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.
He can't express the words to say just how bad Boeing is. There's only this and Airbus in this business. Down 7.53% today. Nothing is going right with this company. There are calls to fire the CEO. There remain safety issues. This stock won't go higher as long as the CEO remains. Brutal.
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.
Announced a hostile takeover of Spirit Airlines today. Really? Won't the Justice Department and Pres. Bidec nix this deal for being anti-competitive?
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 Top Pick Jan 18/22, Down 27.2%)Stockchase Research Editor: Michael O’Reilly Our PAST TOP PICK with SKYW has triggered its stop at $30. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 31%, when combined with our previous buy recommendation.
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.
Everyone is aware of Boeing's problems with the 737 Max (there's a film about this is on Netflix). The Airbus 320neo is outselling the 737. They also have a big defence business in Europe, and defence budgets are rising. This trades at 20x earning, so not cheap, but earnings will grow by 12-13% annually for…