SkyWest, Inc. (SKYW), Delta Air Lines, Inc. (DAL): Can These Airline Stocks Lift Your Portfolio?

Page 1 of 2

In June, the International Air Transport Association (IATA) forecast a 67% increase in profits for the global airline industry in 2013 to $12.7 billion. Passenger traffic will be up more than 5%, the IATA said, and airline occupancy will reach record levels of 80.3%, up more than 1% from last year.

Airlines coped with the rough times of the last few years by aggressively cutting costs and restructuring — either through mergers or, unfortunately in some cases, bankruptcy. But it looks like excellent flying weather this year, with the IATA predicting North American air carriers earning a profit margin of 4.2%.

SkyWest, Inc. (NASDAQ:SKYW)

Let’s take a look at three different airlines and see if these improving industry conditions are benefiting all of them.

The plucky regional carrier

Regional carriers like SkyWest, Inc. (NASDAQ:SKYW) may not be as flashy as the large airlines, but they get the job done very efficiently — and as we will see in the case of this company, profitably.

SkyWest, Inc. (NASDAQ:SKYW) serves cities in the U.S., Canada, the Caribbean and Mexico. The airline makes around 4,100 departures each day with 760 regional aircraft — Canadair regional jets and turboprops. They operate through SkyWest Airlines based in St. George, Utah and ExpressJet Airlines in Atlanta.

SkyWest, Inc. (NASDAQ:SKYW) Airlines has contractual agreements to operate flights for Alaska Airlines, and provides flights under the brand names United Express, Delta Connection, American Eagle and US Airways Express under agreements with United, Delta Air Lines, Inc. (NYSE:DAL), American Airlines and US Airways. ExpressJet operates has flights under the brand names United Express, Delta Air Lines, Inc. (NYSE:DAL) Connection and American Eagle under contractual agreements with United, Delta Air Lines, Inc. (NYSE:DAL) and American Airlines.

SkyWest, Inc. (NASDAQ:SKYW) flights are of the short-hop variety. The average passenger trip length is 524 miles.

In its second-quarter results, SkyWest, Inc. (NASDAQ:SKYW) reported operating income of $50.6, million compared to $46.8 million the same period last year. The company’s fleet has grown by 35 aircraft in the last year. As a result of lower interest expenses, pretax income was up even more percentage-wise–nearly 18%, to $33.7 million.

The company served 5.2% more passengers during the quarter than in 2012′s second quarter, but revenue per available seat mile declined. SkyWest, Inc. (NASDAQ:SKYW)’s balance sheet was solid at quarter’s end. The company had $665.6 million in cash and marketable securities on hand.

The new kid in the skies alters its strategic flight plan

JetBlue Airways Corporation (NASDAQ:JBLU), which calls itself “New York’s Hometown Airline,” opened for business only 13 years ago and now serves 79 cities with 850 flights departing each day.

Their original niche was as a low-fare carrier with superior service. For example, it offers seats — leather seats — with more legroom than other carriers’ coach-class service, and provides DirecTV on seat-back screens.

Recently, JetBlue Airways Corporation (NASDAQ:JBLU) announced innovations designed to entice more upscale leisure travelers to fly with the company. In 2014, it will begin offering seats that can be folded down into lie-flat beds on certain transcontinental routes and be the first airline to offer private little “suites” with doors. The company saw the high profit margin on premium cross-country seats from other airlines and wants to capture some of this rich business for itself. But with a JetBlue Airways Corporation (NASDAQ:JBLU) twist:  it intends to charge less for these premium seats than competitors do.

The company’s second-quarter results revealed some financial turbulence. Investors might want to keep their seat belts on–operating income was $102 million, down substantially from the $130 million the company earned in the comparable quarter last year. In operating-margin terms, the decline was even more stark: 7.6% this year compared to over 10% last year.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!