With shares of Southwest Airlines (NYSE:LUV) trading around $21, is LUV an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let�� analyze the stock with the relevant sections of our CHEAT SHEET investing framework.
T = Trends for a Stock’s MovementSouthwest Airlines is a passenger airline that provides scheduled air transportation in the United States. Consumers and companies across the nation are now looking to travel at an increasing rates, and since air travel is quicker and is becoming less expensive, it is becoming a common transportation method for many. As costs decrease and flights become more efficient, look for business and retail customers to fly at rising rates. Southwest Airlines stands to see soaring profits as consumers and businesses look to travel more than ever.
Southwest Airlines on Thursday reported its fourth-quarter and full-year 2013 results.�Gary C. Kelly, president and CEO, said in a press release: “We are happy to report full year 2013 net income of $805 million, and fourth-quarter 2013 net income of $236 million, both excluding special items. We are extremely proud of these record results and the tremendous progress made on our strategic initiatives, which produced substantial returns and contributed significantly to our superb 2013 financial performance. Our full-year 2013 total operating revenues were a record $17.7 billion, and our cost performance was excellent. We generated strong free cash flow of $1 billion in 2013, allowing us to return $611 million to our shareholders, through share repurchases and dividend payments, and reduce debt and capital lease obligations by $313 million. Our pre-tax return on invested capital, excluding special items, for full-year 2013 was 13.1 percent, nearly double the prior year’s performance. I want to thank the outstanding people of Southwest and AirTran. They deserve all the credit for producing these strong results, which earned them a $228 million contribution to the profit-sharing plan for the year 2013, up 88.4 percent, or $107 million, compared to the prior year.”
Top Airline Companies To Buy Right Now: Singapore Airlines Ltd (SINGY)
Singapore Airlines Limited is a passenger air transportation company. The Company, together with its subsidiaries, is engaged in passenger and cargo air transportation, engineering services, training of pilots, air charters and tour wholesaling and related activities. The Company consists of 101 aircrafts. The Company operates in four segments: airline operations, cargo operations, engineering services and others. The Company's subsidiaries are SIA Engineering Company Limited (SIAEC), SIA Cargo and SilkAir (Singapore) Private Limited (SilkAir). Effective December 24, 2013, Singapore Airlines Ltd, a unit of Temasek Holdings (Pte) Ltd, raised its interest to 40.004% from 32.67% by acquiring a 7.334% interest in Tiger Airways Holdings Ltd from Dahlia Investments Ptye Ltd and Aranda Investments Pte Ltd. Advisors' Opinion:- [By Bruce Kennedy]
Business travel columnist Joe Brancatelli reports the world's longest non-stop commercial route, the Singapore Airlines (OTC: SINGY) 18-hour, business class-only flight between Newark, N.J. and Singapore, will end on Saturday. The airline also retired the world's second-longest non-stop flight, Los Angeles-to-Singapore, last month.
Top Airline Companies To Buy Right Now: WestJet Airlines Ltd (WJA)
WestJet Airlines Ltd. (WestJet) provides airline service and travel packages with scheduled service to more than 85 destinations in North America, Central America and the Caribbean, and has partnership agreements with over 30 airlines around the world. WestJet operates a fleet of more than 100 Boeing Next-Generation 737 and Bombardier Q400 NextGen aircraft. The Company�� subsidiaries include WestJet Investment Corp., WestJet Operations Corp., WestJet Vacations Inc. and WestJet Encore Ltd. Advisors' Opinion:- [By Gerrit De Vynck]
Closely held Porter unveiled plans in April to add as many as 30 CSeries jets in an order valued at as much as $2.1 billion from Montreal-based Bombardier to reach as far as Los Angeles and the Caribbean as it challenges the country�� two biggest carriers, Air Canada and WestJet Airlines Ltd. (WJA) The order, which would be Bombardier�� first for the aircraft with a Canadian carrier, is conditional on the runway extension and a removal of the jet ban.
- [By Eric Lam]
BlackBerry, the smartphone maker looking to sell itself, lost 3.6 percent to pace declines among technology stocks. WestJet (WJA) Airlines Ltd. dropped 2.5 percent as load factor slipped in September. Valeant Pharmaceuticals International Inc. rose 1.4 percent after receiving approvals for products in the U.S. and Canada. Agrium Inc. added 0.7 percent after naming a successor for its retiring chief executive officer.
Top 10 Logistics Companies To Watch In Right Now: US Airways Group Inc (LCC)
US Airways Group, Inc. (US Airways Group) is a holding company whose primary business activity is the operation of a network air carrier through its wholly owned subsidiaries, US Airways, Piedmont Airlines, Inc. (Piedmont), PSA Airlines, Inc. (PSA), Material Services Company, Inc. (MSC) and Airways Assurance Limited (AAL). MSC and AAL operate in support of the Company�� airline subsidiaries in areas, such as the procurement of aviation fuel and insurance. It has hubs in Charlotte, Philadelphia and Phoenix and a focus city in Washington, D.C. at Ronald Reagan Washington National Airport (Washington National). During the year ended December 31, 2011, it offered scheduled passenger service on more than 3,100 flights daily to more than 200 communities in the United States, Canada, Mexico, Europe, the Middle East, the Caribbean, and Central and South America. It also has an East Coast route network, including the US Airways Shuttle service.
The Company had approximately 53 million passengers boarding its mainline flights in 2011. During 2011, the Company�� mainline operation provided scheduled service or seasonal service at 133 airports, while the US Airways Express network served 156 airports in the United States, Canada and Mexico, including 78 airports also served by its mainline operation. US Airways Express air carriers had approximately 28 million passengers boarding their planes in 2011. As of December 31, 2011, the Company operated 340 mainline jets and was supported by its regional airline subsidiaries and affiliates operating as US Airways Express under capacity purchase agreements, which operated 233 regional jets and 50 turboprops. The Company�� prorate carriers operated seven turboprops and seven regional jets at December 31, 2011.
In May 2011, US Airways Group and US Airways entered into an Amended and Restated Mutual Asset Purchase and Sale Agreement (the Mutual APA) with Delta Air Lines, Inc. (Delta). Pursuant to the Mutual APA, Delta agreed to acquire 132 slot pa! irs at LaGuardia from US Airways and US Airways agreed to acquire from Delta 42 slot pairs at Washington National and the rights to operate additional daily service to Sao Paulo, Brazil. On December 13, 2011, the transaction contemplated by the Mutual APA closed and ownership of the respective slots was transferred between the airlines. During 2011, the US Airways Express network served 156 airports in the continental United States, Canada and Mexico, including 78 airports also served by its mainline operation. During 2011, approximately 28 million passengers boarded US Airways Express air carriers��planes, approximately 44% of whom connected to or from its mainline flights.
The Company competes with Southwest, JetBlue, Allegiant, Frontier, Virgin America and Spirit.
Advisors' Opinion:- [By Jonathan Yates]
Stock prices for United Continental (NYSE: UAL), US Airways Group (NYSE: LCC), and Delta Airlines (NYSE: DAL) have soared for 2013.
Pretty remarkable, when you consider the level of debt each of these companies is carrying.�When the market turns, as it always does, the heavy leverage will be a tremendous burden on the ability of all of these airlines to compete and survive.
- [By Paul Quintaro]
Shares of Delta Air (NYSE: DAL) are down 3.6 percent at last check, shares of United Continental (NYSE: UAL) are down 3.8 percent, US Air (NYSE: LCC) shares down 2.8 percent, shares of Southwest (NYSE: LUV) down 2 percent, JetBlue (NASDAQ: JBLU) shares down 2 percent and shares of SkyWest (NASDAQ: SKYW) down nearly 4 percent.
- [By Adam Levine-Weinberg]
Bankrupt carrier American Airlines (NASDAQOTH: AAMRQ ) is on track to merge with smaller rival US Airways (NYSE: LCC ) later this year. Last week, the two companies filed a proxy statement, which details the proposed terms of the merger and provides other information for investors and other stakeholders to evaluate the merger. This proxy statement includes financial projections that are very bullish.
- [By Alexander MacLennan]
But the expected merger between AMR and US Airways (NYSE: LCC ) gives US Airways shareholders a chance to benefit from these routes as well. The new American Airlines Group would not only be able to codeshare these routes but would also take the crown of world's largest airline.
Top Airline Companies To Buy Right Now: Air France KLM SA (AFLYY.PK)
Air France-KLM SA (Air France-KLM), incorporated on April 23, 1947, is an airline engaged in the business of passenger transportation. It has four segments: Passenger, Cargo, Maintenance and Other. The Company�� primary business is to hold direct or indirect interests in the capital of air transport companies and, more generally, in any companies in France or elsewhere whose purpose is related to the air transport business. Air France-KLM activities also include cargo, aeronautics maintenance and other air-transport related activities including, principally, catering and charter services. At March 31, 2011, the Air France-KLM group fleet consists of 609 aircraft, of which 593 were operational. At March 31, 2011, 274 aircraft were fully owned (45% of the fleet), 117 aircraft were under finance lease representing 19% of the fleet and 218 under operating lease representing 36% of the fleet.
Passenger
Passenger operating revenues primarily come from passenger transportation services on scheduled flights with the Company�� airline code, including flights operated by other airlines under code-sharing agreements. They also include commissions paid by SkyTeam alliance partners, code-sharing revenues, revenues from excess baggage and airport services supplied by the Company�� to third party airlines and services linked to information technology (IT) systems.
Cargo
Cargo operating revenues come from freight transport on flights under the companies��codes, including flights operated by other partner airlines under code-sharing agreements. Other cargo revenues are derived principally from sales of cargo capacity to third parties. During the fiscal year ended March 31, 2011, the Company transported more than 1.5 million tons of cargo, of which 66% in the bellies of passenger aircraft and 33% in the cargo fleet, to a network of approximately 254 destinations in approximately 111 countries. Air France-KLM Cargo has a product range organized around four prod! uct families, Equation, Cohesion, Variation and Dimension.
Maintenance
Maintenance operating revenues are generated through maintenance services provided to other airlines and customers globally. The Company�� two engine shops are located in Amsterdam and Paris. CFM56 engine shops support the fleet of CFM56-5 power plants in the world, with nearly 400 engines operated by numerous airlines. CF6-80E1 provides full-service maintenance. KLM Engineering & Maintenance (AFI KLM E&M) provides an alternative to the manufacturer�� services in terms of overhaul and services on this engine with its offering supported by technological infrastructure.
Other
The revenues from this segment come primarily from catering supplied by the Company to third-party airlines and to charter flights operated primarily by Transavia. The catering business is regrouped around Servair, an Air France subsidiary which generates more than 90% of the revenues of this activity, and KLM Catering Services, a subsidiary of KLM.
Advisors' Opinion:- [By El Torero]
The airline will undoubtedly pounce on the likely failings of rival companies, though this is also an area where easyJet will be eager to move in. Spanair is gone as is Malev Zrt, two former Ryanair rivals. Air France-KLM (AFLYY.PK) and Iberia are in trouble, among other European airlines. Ryanair will take advantage of such weaknesses in its aim of becoming Europe's out-and-out dominant short-haul carrier. As other airlines cut routes, airports are now looking to Ryanair to take up the newly available airport space. As a result of this, with "opportunities opening up in Germany, Scandinavia and Central Europe" in particular, Ryanair's deputy chief executive, Howard Millar sees the Irish company increase its market share from 15 percent to 20 percent before the end of the decade.
Top Airline Companies To Buy Right Now: China Eastern Airlines Corp Ltd (CEA)
China Eastern Airlines Corporation Limited (China Eastern), incorporated on April 14, 1985, is an air carriers operating in the People�� Republic of China. As of December 31, 2010, the Company served a route network that covers 182 domestic and foreign cities in 30 countries. It operates from Shanghai�� Hongqiao International Airport and Pudong International Airport. During the year ended December 31, 2010, its flights accounted for 52.2% and 37.9% of all the flight traffic at Hongqiao International Airport and Pudong International Airport, respectively. During 2010, it accounted for approximately 31.1% of the total passenger traffic volume and 19% of the total freight volume on routes to and from Shanghai. As of December 31, 2010, it had a fleet of 355 aircraft, including 337 passenger jets each with a seating capacity of over 100 seats and 18 freighters.
Passenger Operations
During 2010, the Company operated approximately 9,600 scheduled flights per week, excluding charter flights, serving a route network that covers 182 domestic and foreign cities in 30 countries. During 2010, its domestic routes generated approximately 71.5% of its passenger revenues. Its heavily traveled domestic routes link Shanghai to the commercial and business centers of the People�� Republic of China, such as Beijing, Guangzhou and Shenzhen. During 2010, it also operated approximately 361 flights per week to and from Hong Kong, originating from Shanghai and 16 major cities in eastern, northern and western the People�� Republic of China. During 2010, it operated approximately 103 flights per week between mainland China and Taiwan. During 2010, its regional routes accounted for approximately 5.4% of its passenger revenues. During 2010, it operated approximately 1,079 international flights per week, serving 60 cities in 29 countries, linking Shanghai to cities in Asian and Southeast Asian countries, such as Japan, Korea, India, Singapore, Thailand and Bangladesh and locations in Europe, the Un! ited States and Australia.
During 2010, the Company re-started its Shanghai to London and Shanghai to Moscow routes. During 2010, revenues derived from its operations on international routes accounted for approximately 23.2% of its passenger revenues. During 2010, revenues derived from its operations to and from Japan accounted for approximately 7.7% of its passenger revenues and approximately 33.4% of its international passenger revenues. Its international and regional flights and a portion of its domestic flights either originate or terminate in Shanghai, the central hub of its route network. Its operations in Shanghai are conducted at Hongqiao International Airport and Pudong International Airport. On March 16, 2010, it moved its operations at Hongqiao International Airport to the terminal two of Hongqiao International Airport. It operates its flights through three hubs located in eastern, northwestern and southwestern China, namely Shanghai, Xi��n and Kunming, respectively.
Cargo and Mail Operations
The Company�� cargo and mail business utilizes the same route network used by its passenger airline business. It carries cargo and mail on its freight aircraft, as well as in available cargo space on its passenger aircraft. Its cargo and mail routes are international routes. As of December 31, 2010, it had seven MD-11F, four B777F and two B757-200F freight aircraft under operating leases for cargo and mail operations. It also has three Airbus A300-600R aircraft, as well as two Boeing 747-400ER freighters for its cargo operations.
The Company competes with Air China Limited, China Southern Airlines Company Limited, Hong Kong Dragon Airlines Limited, Cathay Pacific Airways, Thai Airways International, Singapore Airlines, Delta Air Lines, United Airlines, American Airlines, Air Canada, Delta, Alitalia, Air France-KLM Group, Asiana Airlines, Korean Air, Virgin Atlantic Airways, British Airways, Lufthansa German Airlines, Aeroflot and Qantas Airways.
Advisors' Opinion:- [By Belinda Cao]
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. slumped 3.4 percent last week to a seven-month low of 89.04. The gauge traded at 13.5 times estimated earnings, 3.6 percent below the S&P�� valuation, data compiled by Bloomberg show. China Southern Airlines Co. (ZNH) and China Eastern Airlines Corp. (CEA) lost more than 6 percent April 5, while Home Inns & Hotels Management Inc. (HMIN) tumbled 16 percent in the week.
Top Airline Companies To Buy Right Now: Controladora Vuela Compania de Aviacion SAB de CV (VLRS)
Controladora Vuela Compania de Aviacion SAB de CV (Volaris Aviation Holding Company) is a Mexico-based company principally engaged in the airline passenger transportation industry. The Company is a law-cost carrier airline. Controladora Vuela Compania de Aviacion SAB de CV offers direct, point-to-point flights. The Company serves through secondary, lower cost airports and provides a single class of service. The Company utilizes such aircraft as the Airbus A319 and A320 families, among others. The Company has such subsidiaries as Comercializadora Volaris SA de CV, Servicios Corporativos Volaris SA de CV, Concesionaria Vuela Compania de Aviacion SAPI de CV, Deutsche Bank Mexico SA Trust 1484, among others. Advisors' Opinion:- [By John Udovich]
When most American investors think of discount airline stocks, they probably think of relatively large capped Southwest Airlines Co (NYSE: LUV)�or sort of small cap�JetBlue Airways Corporation (NASDAQ: JBLU) rather than�small cap Controladora Vuela Co Avcn SA CV (NYSE: VLRS) which owns Volaris���a discount airline serving the�Mexican market. However, any investor who has read Benjamin Graham�� Intelligent Investor might want to remember his sage advice about avoiding airline stocks���mainly because airlines were such a new and unproven sector that had yet to make money. But could Controladora Vuela Co Avcn SA CV actually be an airline stock worth owning?
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