Is Delta Air Lines a better investment candidate in the industry?

The airline industry received some attention this week probably due to Delta Air Lines’ (NYSE:DAL) expression of interest in acquiring Spirit Airlines (NYSE:SAVE). Some counters including American Airlines Group (NASDAQ:AAL) and JetBlue Airways Corporation (NASDAQ:JBLU) therefore reported some movement. Herein, the analysis focuses on how investors should approach the industry.

Due to COVID-19, aircrafts remained grounded for the better part of the last two years. The industry has since then restarted operations. Headwinds that include staffing and fuel costs however remain a key concern for the low-margins and high-investment industry.

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What this implies, is that investors interested in the industry may not attract handsome returns in the near future. Investors who had been locked in the industry by the economic grounding of aircraft may however find opportunities to exit.

Airlines remain in the red

Share price analysis shows that on average, all companies in the industry reported losses ranging from 33% to 54%. The larger airlines like AAL reported more losses. The best performers, based on lower losses, include JetBlue and Delta with 33%.

What this means is that if the industry were to turn bullish, the two companies would also likely outperform the rest. Due to the losses, this analysis finds that buying is not recommended. Existing investors may continue holding the assets, waiting for the industry to recover.

Overall, if an investor were to choose one stock to buy now for long-term potential gains, then Delta Air Lines provides a better opportunity. The recent announcement about Spirit Airlines could signal potential improvements. However, all investors must be aware that recovery in the industry will take time.

Summary

The airline industry remains under bear control despite the recent activity. Fundamental performance challenges present the greatest hurdle for the industry. If a preferred investment were to be picked, let it be Delta Air Lines.

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