Global Airlines Trade: Recap and Your Global Basket
Despite a huge run in airlines stocks on a combination of structural efficiency advances, lower fuel cost tailwinds, and increased traffic there are reasons to believe the trade can fly higher.
As the U.S. regulators clear the American and US Air merger it's time to take a quick look at a basket of companies that gives diversified exposure to the sector.
In Europe, budget airlines are delivering record profitability and remain in a period of growth. Yesterday EZ-Jet was +7% as they announced 46% increase in profit per seat.
Lufthansa ( DLAKY , quote ) is the world's largest airline by revenue and remains well positioned to capture recovery in the EU region while holding elite international routes.
Russia's Aeroflot is a classic turnaround story somewhere in the last third of that process. Own the stock now to take advantage of their efficiency gains, and dominant presence in the region.
In Asia, Japan Airlines is the cheapest major global airline in the world and should be owned. Back to the US, Delta ( DAL , quote ) remains the cheapest US carrier at 8.5X while recent quarter showed operating margins at an impressive 13.8% (highest amongst peers). Take a nibble on smaller carriers to find extra growth.
Republic ( RJET , quote ) has $500m market cap and runs 258 jets has seen revenues grow 58% in last year.
See ya in the skies…