Delta Air Lines, Inc. (DAL), US Airways Group Inc (LCC), Spirit Airlines Incorporated (SAVE): How to Gain Exposure to the Airline Industry

As an example, June 2013 posted record revenue passenger miles. The company’s RPM rose 7.5% from 5.8 billion to 6.2 billion. Therefore, the carrier needs to add new aircraft to capture as many customers as possible. Its available seat miles rose by 5.3% to 7 billion. Finally, its load factor rose by 1.7 points to 88.2.

In brief, the carrier is expecting more passenger traffic, and it is adding additional seat miles in the form of new aircraft to bring higher revenue. Therefore, the stock may be posed for more upside.

Spirit Airlines Incorporated (NASDAQ:SAVE) is another major airline posed for growth. The stock trades with a P/E of 22.3. The carrier posted significantly higher profits in its most recent quarterly earnings report. Its revenue rose by 20% to $407 million. Its net income rose from $35 million, or $0.48 per share, to $42 million, or $0.58 per share year-over-year. Last, its free cash flow expanded from $83 million to $101 million year-over-year.

The carrier is also experiencing strong passenger traffic. According to its June monthly traffic report, revenue passenger traffic revved up by 25% to 1.0 billion. To meet such a strong demand, the airline added 22% more available seat miles, reaching a total of 1.16 billion. Its load factor increased by 2.2% to 88.3%.

Thus, Spirit Airlines Incorporated (NASDAQ:SAVE) is showing signs of growth with the addition of new aircraft. According to the investor update released in July, the carrier will operate 79 aircraft by 2015, up from 54 today. The carrier will take delivery of 22 Airbus A320’s and one A320 Neo. What’s more is that the company has ordered 20 A321 planes, on top of the existing order for 96. Only a company confident in its revenue-generation ability would order this amount of aircraft.

The foolish conclusion

Your portfolio needs to be exposed to the recovery industry. Delta Air Lines, Inc. (NYSE:DAL), US Airways Group Inc (NYSE:LCC), and Spirit Airlines Incorporated (NASDAQ:SAVE) offer compelling investment opportunities, and they could be great choices for your portfolio.

The article How to Gain Exposure to the Airline Industry originally appeared on Fool.com and is written by Robinson Roacho.

Robinson Roacho has no position in any stocks mentioned. The Motley Fool owns shares of Spirit Airlines. 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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