In light of the U.S. and European Union resolving aircraft disputes involving Boeing Co. (BA, Financial) and Airbus SE (XTER:SE), four airline stocks that, as of Tuesday, have outperformed the Standard & Poor’s 500 Index benchmark by at least 10% over the past six months and had at least eight years of profitability over the past 10 years are Alaska Air Group Inc. (ALK, Financial), Spirit Airlines Inc. (SAVE, Financial), Hawaiian Holdings Inc. (HA, Financial) and Mesa Air Group Inc. (MESA, Financial) according to the All-in-One Screener, a Premium feature of GuruFocus.
U.S. and European Union ends 17-year-long fight over airline tariffs
The U.S. and European Union announced on Tuesday that the two global regions agreed to suspend tariffs stemming from the Boeing-Airbus dispute for five years. European Commission President Ursula von der Leyen said in a summit with U.S. President Joe Biden that the meeting “started with a breakthrough on aircraft” and resulted in a new chapter in the EU’s relationship with the U.S.
Von der Leyen said that the meeting moves the relationship “from litigation to cooperation on aircraft” after 17 years of dispute. The agreement comes as Boeing and Airbus attempt to recover from the coronavirus pandemic over the past year.
As such, investors may find opportunities in airlines that have shown good profitability over the past 10 years and are outperforming the benchmark during the past six months. GuruFocus’ All-in-One Screener listed four airlines that had at least eight years of profitability over the past 10 years, i.e., the airline had no more than two years of losses since 2010.
Alaska Air Group
Shares of Alaska Air Group (ALK, Financial) traded around $63.87 on Tuesday. The stock has gained 31.72% over the past six months, outperforming the S&P 500 by approximately 14.22%.
The Seattle-based airline’s earnings per share have been positive each year since 2011, except for the coronavirus pandemic-driven year of 2020.
Gurus with large holdings in Alaska Air include PRIMECAP Management (Trades, Portfolio), Steven Cohen (Trades, Portfolio)’s Point72 Asset Management and Diamond Hill Capital (Trades, Portfolio).
Spirit Airlines
Shares of Spirit Airlines (SAVE, Financial) traded around $34.12 on Tuesday. The stock has gained approximately 30.82% during the past six months, outperforming the S&P 500 by approximately 13.32%.
Spirit Airlines has reported positive Ebitda each year from 2011 to 2019 despite reporting negative Ebitda in 2020. Despite this, the Miramar, Florida-based airline said in a Monday “Regulation FD” filing that it expects Ebitda margins for the second quarter to be modestly positive as leisure demand started rebounding. New York Governor Andrew Cuomo announced on Tuesday that the state will lift most of its Covid-19 restrictions now that at least 70% of adult New Yorkers have received at least one vaccination dose.
Hawaiian Holdings
Shares of Hawaiian Holdings (HA, Financial) traded around $27.18 on Tuesday. The stock has gained approximately 44.97% during the past six months, outperforming the S&P 500 by approximately 27.47%.
The Hawaiian-based airline reported positive earnings each year from 2012 to 2019. The company said in a May 25 filing that while the pandemic continues to significantly impact the business, Hawaiian saw strong demand in North America during the second quarter of 2021.
Mesa Air
Shares of Mesa Air (MESA, Financial) traded around $9.44 on Tuesday. The stock gained 41.48% over the past six months, outperforming the S&P 500 by approximately 23.98%.
GuruFocus ranks the Phoenix-based airline’s profitability 5 out of 10: Profit margins and returns are outperforming more than 60% of global competitors despite three-year revenue and earnings decline rates underperforming over 75% of global airlines.
- PRIMECAP Management Undervalued Stocks
- PRIMECAP Management Top Growth Companies
- PRIMECAP Management High Yield stocks, and
- Stocks that PRIMECAP Management keeps buying
- Steven Cohen Undervalued Stocks
- Steven Cohen Top Growth Companies
- Steven Cohen High Yield stocks, and
- Stocks that Steven Cohen keeps buying
