Best Airline Stocks To Own For 2014

For more than 18 months, Spirit Airlines (SAVE) could no wrong. That all changed today with the budget airline’s released its September revenue metrics. Cowen’s Helane Becker and Conor Cunningham�explain why investors are pounding Spirit’s shares today:

Spirit Airlines

Spirit lowered their 3Q14 margin guidance due to an underpayment of a Federal Excise Tax on jet fuel. We, and the company, view this as a one-time item. Spirit also reported September traffic results, with another month of declining load factors. We are concerned about this as the company is intending to significantly grow 2015 capacity…

Spirit reported September traffic increased by 13.5% on 18.0% more capacity for a load factor of 81.5%, down by 3.2 ppt y/y. This is now the second consecutive month we have seen load factors decline. We continue to model in declining load factors as the company will significantly grow capacity starting in late 2014. As load factors decline we expect pricing to follow. We forecast 2015 capacity growth of 29%, driven by 22 aircraft to be delivered from 4Q14 to 4Q15. Again, declining load factors is a concerning trend and may negatively impact pricing. The company also has cost tailwinds related to pilot training costs which have already occurred. Revenues should start to offset the costs in 1Q15.

Best High Tech Stocks To Buy Right Now: AMR Corp (AAMRQ)

AMR Corporation (AMR), incorporated in October 1982, operates in the airline industry. The Company�� principal subsidiary is American Airlines, Inc. (American). As of December 31, 2011, American provided scheduled jet service to approximately 160 destinations throughout North America, the Caribbean, Latin America, Europe and Asia. AMR Eagle Holding Corporation (AMR Eagle), a wholly owned subsidiary of AMR, owns two regional airlines, which do business as American Eagle - American Eagle Airlines, Inc. and Executive Airlines, Inc. (collectively, the American Eagle carriers). American also contracts with an independently owned regional airline, which does business as AmericanConnection (the AmericanConnection carrier). As of December 31, 2011, AMR Eagle operated approximately 1,500 daily departures, offering scheduled passenger service to over 175 destinations in North America, Mexico and the Caribbean.

American, AMR Eagle and the AmericanConnection airline served more than 250 cities in approximately 50 countries with, on average, 3,400 daily flights and the combined network fleet numbered approximately 900 aircraft as of December 31, 2011. American Airlines is also a founding member of the oneworld alliance, which includes British Airways, Cathay Pacific, Finnair, LAN Airlines, Iberia, Qantas, JAL, Malev Hungarian, Mexicana, Royal Jordanian and S7 Airlines. Together, oneworld members serve 750 destinations in approximately 150 countries, with about 8,500 daily departures. American is also one of the scheduled air freight carriers in the world, providing a range of freight and mail services to shippers throughout its system onboard American�� passenger fleet.

To improve access to each other�� markets, American has established marketing relationships with other airlines and rail companies. As of December 31, 2011, American had marketing relationships with Air Berlin, Air Pacific, Air Tahiti Nui, Alaska Airlines, British Airways, Cape Air, Cathay Pacific, China Eastern Airl! ines, Dragonair, Deutsche Bahn German Rail, EL AL, Etihad Airways, EVA Air, Finnair, GOL, Gulf Air, Hawaiian Airlines, Iberia, Japan Airlines (JAL), Jet Airways, JetStar Airways, LAN (includes LAN Airlines, LAN Argentina, LAN Ecuador and LAN Peru), Niki Airlines, Qantas Airways, Royal Jordanian, S7 Airlines, and Vietnam Airlines.

American has established the AAdvantage frequent flyer program (AAdvantage). AAdvantage members earn mileage credits by flying on American, American Eagle and the AmericanConnection carrier or by using services of other participants in the AAdvantage program. Mileage credits can be redeemed for free, discounted or upgraded travel on American, American Eagle or other participating airlines, or for other awards. American sells mileage credits and related services to other participants in the AAdvantage program. There are over 1,000 program participants, including a credit card issuer, hotels, car rental companies, and other products and services companies in the AAdvantage program. As of December 31, 2011, AAdvantage had approximately 69 million total members.

The Company competes with Alaska Airlines (Alaska), Delta Air Lines (Delta), Frontier Airlines, JetBlue Airways (JetBlue), Hawaiian Airlines, Southwest Airlines (Southwest) and AirTran Airways (Air Tran), Spirit Airlines, United Airlines (United) and Continental Airlines (Continental), US Airways and Virgin America Airlines.

Advisors' Opinion:

• [By Adam Levine-Weinberg]

  United's high cost structure might be manageable if it could sustain a revenue premium against competitors like Delta and AMR (NASDAQOTH: AAMRQ  ) . However, United was the worst airline in the U.S. according to most customer service metrics in 2012, destroying customer goodwill. Unless the company can make a miraculous turnaround and justify higher fares than competitors, United's high cost structure will doom it to mediocrity in the long run.

• [By Johanna Bennett]

  A federal judge cleared the way for AMR (AAMRQ) to exit bankruptcy, clearing the way for a merger between American Airlines (owned by AMR) and U.S. Airways Group (LCC). AMR and U.S. Airlines�rose 2.7% and 0.6%�respectively.

• [By Ben Levisohn]

  Shares of AMR Corp. (AAMRQ) have suddenly plunged this afternoon, although it’s not exactly what’s behind the drop.

  Here’s a chart of the sudden move:

  Not only did the stock drop, but you can see a sudden spike in volume that persisted through the drop and into a rebound.

  Shares of AMR Corp. had been trading little changed when the drop occurred, sending shared down as much as 25% on the day. They’re down 9.7% at $6.23 at 2:55 p.m. Shares of US Airways (LCC) also fell–though not nearly as much. They’re down 1.3% at $22.38.

   

• [By Reuters]

  Matt York/AP The U.S. Department of Justice, which is fighting a proposed merger of US Airways Group and American Airlines parent AMR Corp., asked a judge Tuesday to postpone a trial in the case, saying the federal government shutdown would prevent its staff from working. But a lawyer for the airlines said he expected the trial to determine if the government can stop the merger of US Airways and American Airlines to begin as scheduled in late November. "From what the judge said in there, and I think everybody heard, we're going to trial on Nov. 25," Richard Parker said after a pretrial hearing. "We are planning on a Nov. 25 trial date." Judge Colleen Kollar-Kotelly didn't mention a potential stay during the pretrial hearing Tuesday. Shares of US Airways (LCC) were up 3.5 percent at $19.63 in midday trading Tuesday, while AMR (AAMRQ) rose 9.5 percent to $4.50. The Justice Department had asked for the stay because of a government-wide shutdown that started Tuesday. "This is creating difficulties for the Department to perform the functions necessary to support its litigation efforts," the department said in a court filing. The Justice Department and several states sued Aug. 13 to stop the merger, saying the deal to create the world's biggest carrier would lead to higher fares and stifle competition. Parker said a settlement resolving the fight was still possible. "We are interested in a reasonable settlement in this case," he said. Any settlement would mean asset sales, which in turn would require approval from the judge overseeing American's emergence from bankruptcy. The airlines have defended the deal in court filings, saying it would create $500 million in savings to consumers annually by creating a stronger competitor to Delta Air Lines Inc and United Continental Holdings Inc. But the Justice Department has said the merger would be bad for consumers. Its complaint focused on Reagan National Airport, outside Washington, where the two carriers contr

Best Airline Stocks To Own For 2014: Allegiant Travel Co (ALGT)

Allegiant Travel Company, incorporated on April 4, 2006, is a leisure travel company focused on providing travel services and products to residents of small, underserved cities in the United States. The Company operates a passenger airline marketed primarily to leisure travelers in small cities, allowing it to sell air transportation both on a stand-alone basis and bundled with the sale of air-related and third party services and products. In addition, it provides air transportation under fixed fee flying arrangements. The Company provides scheduled air transportation on limited frequency nonstop flights between small city markets and leisure destinations. As of February 1, 2013, its operating fleet consisted of 58 MD-80 aircraft and six Boeing 757-200 aircraft providing service on 191 routes to 85 cities including 13 leisure destinations and 72 small cities and including cities served seasonally. In January 2012, the Company took ownership of two MD-80 aircraft. In October 2012, the Company announced the formation of Allegiant Systems, a joint venture with AvIntel and Lixar IT.

The Company provides unbundled air-related services and products in conjunction with air transportation for an additional cost to customers. These optional air-related services and products include use of its Website for purchases, use of its call center for purchases, advance seat assignment, baggage fees, priority boarding, its own travel protection product, change fees, food and beverage purchases on board and other air-related services. The Company offers third party travel products, such as hotel rooms, ground transportation (rental cars and hotel shuttle products) and attractions (show tickets) bundled with the purchase of its air transportation.

The Company provides air transportation through fixed fee agreements and charter service on a seasonal and ad-hoc basis for other customers. As of February 1, 2013, its operating aircraft consisted of 58 MD-80 aircraft and six Boeing 757-200 aircraft. D! uring the year ended December 31, 2012, the Company has entered into purchase agreements to acquire seven Airbus A320 aircraft and operating lease agreements for an additional nine Airbus A319 aircraft.

The Company competes with AirTran, Frontier, Spirit, Southwest, US Airways, Alaska Airlines, Horizon Air, Delta, Xtra, United and American.

Advisors' Opinion:

• [By Sean Williams]

  Keep in mind that some companies�deserve�their current valuations. Allegiant Travel (NASDAQ: ALGT  ) , for example, is creating cash flow hand over fist by luring in passengers with low ticket fees and then utilizing hefty optional fees such as on checked baggage, carry-on baggage, and food, which are almost pure margin plays, to add to its bottom line. The beauty of Allegiant's model is that many of these ancillary fees are purchased online or at electronic points of sale, meaning few employee costs.

• [By WWW.DAILYFINANCE.COM]

  LM Otero/AP DALLAS -- The federal government is suing Southwest Airlines (LUV) after failing to reach a settlement with the carrier over allegations that repairs to dozens of planes didn't meet safety standards. The Justice Department sued Southwest on Monday in federal district court in Washington state. The lawsuit seeks to enforce $12 million in civil penalties that the Federal Aviation Administration announced in late July. The government says that starting in 2006 Southwest hired a contractor to make extensive repairs on 44 planes to prevent the aluminum skin from cracking. The FAA says the contractor, Aviation Technical Services Inc. of Everett, Washington, failed to follow proper procedures. "We dispute the FAA's allegations and look forward to the opportunity to vigorously defend Southwest's record in a court of law," Southwest spokeswoman Brandy King said Monday night. The Southwest case is the second-largest penalty that the FAA has ever sought against an airline, behind only a $24.2 million case against American Airlines. Typically, airlines negotiate with the FAA to reduce the penalties. The FAA hit Southwest with $10.2 million in penalties in 2008, and that case was settled a year later for $7.5 million. The government's decision to sue Southwest barely three months after announcing the most recent penalty indicated the wide gap between the two sides. The most serious allegation in the current case involves replacement of parts of the fuselages on 44 planes. The FAA said Aviation Technical Services workers under Southwest's supervision put sealant under the new skin panels but didn't install all the rivets fast enough for the sealant to be most effective, which could create gaps for moisture to penetrate and cause corrosion. Dallas-based Southwest returned the planes to service in 2009 and kept flying some of them for months after the FAA warned the airline of the improper repairs, the FAA said. Regulators approved later repairs. Pass

• [By Sean Williams]

  Another key point to Southwest's success has been its constant focus on giving the customer top value among domestic carriers. You'll certainly find a cheaper upfront ticket price if you look around for domestic flights from a small regional carrier like Allegiant Travel (NASDAQ: ALGT  ) or Spirit Airlines (NASDAQ: SAVE  ) . Then again, Southwest doesn't charge for the first two checked bags, whereas Allegiant and Spirit charge for both each checked bag as well as carry-on bags! Southwest's keep-it-simple approach and easy-to-understand pricing have been instrumental in winning over passengers.

Best Airline Stocks To Own For 2014: Ryanair Holdings PLC (RYA)

Ryanair Holdings plc (Ryanair Holdings), is a holding company for Ryanair Limited (Ryanair). Ryanair operates a low-cost, scheduled-passenger airline serving short-haul, point-to-point routes between Ireland, the United Kingdom, Continental Europe, and Morocco. As of June 30, 2012, the Company offered approximately over 1,500 scheduled short-haul flights per day serving approximately 160 airports largely throughout Europe with an operating fleet of 294 aircraft flying approximately 1,500 routes. Ryanair sells seats on a one-way basis. The Company also holds a 29.8% interest in Aer Lingus Group plc. As of June 30, 2012, Ryanair�� operating fleet was composed of 294 Boeing 737-800 aircraft, each having 189 seats. Ryanair�� fleet totaled 294 Boeing 737-800s at March 31, 2012. As of June 30, 2012, Ryanair owned and operated four Boeing 737-800 full flight simulators for pilot training. Advisors' Opinion:

• [By Inyoung Hwang]

  Ryanair Holdings Plc (RYA), the discount airline operator that�� the second-biggest stock in Ireland�� ISEQ index, declined 1.7 percent to 7.23 euros in Dublin. Kerry Group, a supplier of food ingredients, sank 1.4 percent to 45.24 euros.

Best Airline Stocks To Own For 2014: 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.