Are Airline Stocks a Buy?

Are Airline Stocks a Buy?

Airlines have taken a beating, and for good reason as travel restrictions plague the industry. However, with Treatury department agreed to bail out US airlines, are they a buy now the worry of Airlines going under is gone? 

American Airlines

As you can see from the right, AA was not doing well even before the COVID-19 pandemic. AA stocks have been on a downward trend since 2018, which is worrying to see in a time where US was experiencing one of the biggest economic booms in history. AA’s competitors and the airline industry were doing well. I look for stocks that are undervalued with a miss match in share price. I don’t see that with AA, espeically since they have more debt than any of their compeitiors by 2019…a alarming $33.4 billion. AA is a pass for me.

 

Delta Airlines

The opposite could be said about Delta Airlines, they have been on a upward trend since the end of 2016, experiencing new highs. Looking at their annual report, operating revenue grew by 7.2% to $11.4 billion backed by 9% increase in premium ticket sales and 18% increase in loyalty revenue. I find Delta appeal at just $22.27 a share.  When factoring the bailout they will receive, and a healthy cash position of $4.2 billion in FCF, Delta is a buy in my opinion. I will be adding them to my paper money portfolio for this project. 

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