An airline industry stocks rally sprouted on Monday on the
Delta Airlines Inc.
) inclusion in the S&P 500 stock market index. Improved
performance by this once-bankrupt global airline company helped
it to attain the S&P 500 status.
Delta Airlines will replace
BMC Software Inc.
) after trading ends on Tuesday, as the information technology
company has been acquired by private equity Bain Capital LLC.
Delta's addition to the S&P 500 GICS (Global Industry
Classification Standard) Airlines sub-industry index energised
most of the sector stocks, with most of them ending the day in
green. Delta too impressed with its stock rising 9.40% in Monday
trade on Nasdaq.
Notably, Delta used to be an S&P 500 component till Aug
2005, when it was dropped from the index ahead of its Chapter 11
filing of Bankruptcy protection. With the re-entry, Delta will be
the second airline stock after
Southwest Airlines Co.
), to join the benchmark gauge.
Atlanta-based Delta initiated a cost cut program to
restructure its business post-bankruptcy filing and acquired
Northwest Airlines in 2008 to become one of the largest airline
companies in the world. Delta has performed impressively in the
last few years and has considerably cut its debt to attain the $7
billion debt reduction target since 2009.
Encouraged by its strong performance and liquidity at the end
of the second quarter, Delta resumed its dividend payment. The
company paid a dividend of 6 cents per share on Aug 6 and
authorized a $500 million share repurchase program to boost
Additionally, Delta continues to expand its operational base
through the introduction of new services connecting various
domestic and international destinations. The acquisition of a 49%
stake in British carrier Virgin Atlantic from Singapore Airlines
is expected to provide Delta a strong foothold in the lucrative
transatlantic route and place it ahead of arch rival
United Continental Holdings Inc.
). We believe the operational and financial success of the
airline behemoth has contributed significantly to its return to
the S&P 500 club.
Delta currently carries a Zacks Rank #3 (Hold).
BMC SOFTWARE (BMC): Free Stock Analysis
DELTA AIR LINES (DAL): Free Stock Analysis
SOUTHWEST AIR (LUV): Free Stock Analysis
UNITED CONT HLD (UAL): Free Stock Analysis
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