SkyWest recently won a 12-year contract to operate 40 Embraer SA (ADR) (NYSE:ERJ) E175 aircraft for United. Also, United Continental has ordered 30 additional aircraft to be distributed to its regional routes. Investors may expect that SkyWest, Inc. (NASDAQ:SKYW) will acquire this contract due to previous relations with United and revenue will be driven to higher levels. Overall, the high passenger traffic from major airlines should be relied upon to boost SkyWest’s revenue. A long position in the stock is highly recommended.
Enough of regional airlines and bring me a major airline
Delta Air Lines, Inc. (NYSE:DAL) operates flights in the United States and internationally. The company trades with a P/E of 17.5, also below the industry’s average. The company posted unchanged revenue of $8.5 billion, but decreasing net income from $124 million to $7 million due to higher operation expenses.
The company looks promising as an investment for growth-oriented portfolios. The carrier just inaugurated a $1.4 billion international terminal in the JFK International Airport. The international presence of the carrier should expand significantly. The company has resumed its routes JFK – Zurich, JFK – Guatemala City.
In addition, the company was tentatively awarded permission by the U.S. Department of Transportation (DOT) to increase its service to Brazil with additional daily nonstop flights between Atlanta and Sao Paulo. This flight could start as early as Oct 1. However, I would suspect the carrier will aim for a route from the JFK Airport to Sao Paulo to take advantage of its new international terminal.
Last, the company reported increasing revenue passenger miles (RPM) in its May monthly traffic report. As long as the passenger traffic remains strong, Delta Air Lines, Inc. (NYSE:DAL) will continue to provide contracts to SkyWest, which will increase its revenue.
A Foolish note
Passenger traffic remains strong, and these airlines continue to expand operations through the inauguration of new routes and facilities, as well as aircraft acquisitions. I would highly recommend buying these stocks as a basket to gain exposure to the recovering airline industry.
The article 3 Companies for Your Growth Portfolio originally appeared on Fool.com and is written by Robinson Roacho.
Robinson Roacho has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Robinson is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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