Alaska Air Group, Inc. (ALK), Avis Budget Group Inc. (CAR): Three Ways to Play the Airline Industry

The carrier-car rental partnership is a win-win situation.

Spirit Airlines Incorporated (NASDAQ:SAVE) is a regional carrier that has expanded remarkably. The company provides travel opportunities mainly in and from South Florida, the Caribbean, and Latin America. The airline trades with a P/E of 18.9, while the industry’s average is 31.9. What’s more is that its balance sheet carries no debt. Highlights from its most recent earnings report include an outstanding 22% increase in revenue to $370 million. Its net income jumped 30% to $30 million.

Although its growth has been stunning, I believe the company is still implementing an aggressive expansion strategy. The company has inaugurated nine new routes from Dallas/Fort Worth, Texas, Philadelphia, Baltimore and Houston on April 25. In addition, four more routes will start in June 13 and June 14 from Dallas/Fort Worth, Texas and Houston.

The company should take a significant market share from American Airlines and United Continental. Although I do not believe that its revenue will be significantly higher for the second quarter of 2013, investors should look into the earnings report for the third quarter to observe the impact of these new routes.

In addition, the company has added four Airbus aircraft, and five more are scheduled to be delivered in 2013. Also, the partnership with Avis should be beneficial to the carrier because customers will be loyal to both companies to take full advantage of the partnership. Lastly, the company’s ability for revenue-generation is great. It hosted job fairs for new flight attendants jobs in Las Vegas and Dallas/Fort Worth.

The conclusion

The airline industry is improving, and these companies offer an interesting investment prospectus. They have a solid past, and their future looks promising. For these reasons, long positions are highly recommended.

The article 3 Ways to Play 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 INC. (NASDAQ:SAVE). 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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