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Analysis: Airline sector to see merger synergies play out

  • Interesting analysis from Stifel Nicolaus makes the argument that the rally in airline stocks is just getting started.
  • Despite all the talk about carrier consolidation being played out, only one large merger (Delta-Northwest) has been implemented to the hilt, notes the investment firm.
  • The Southwest-AirTran, United-Continental, and U.S. Airways-American combinations still have various amounts of synergies to be realized.
  • Stifel's sector buy recommendations: Delta Air Lines (DAL), United Continental (UAL), Alaska Air (ALK), Spirit Airlines (SAVE), and Allegiant Travel (ALGT).
Comments (1)
  • goldbaum
    , contributor
    Comments (78) | Send Message
    How come AAL is not in the list? I believe AAL is the airline that has the most to gain through recent merger synergies due to its sheer size and economies of scale.Lots to gain in its south american routes,specially due to soccer world cup event to be held in Brazil in June 2014!!! Very expensive tickets indeed that are fully booked.
    Add to this an aggresive expansion in their China very profitable routes of aprox.
    60pct.,plus a total occuppancy overall rate higher than 80pct and you get a sum of heavy tail winds for this newly formed biggest in the world airline.
    At the recent price of Usd 37 pps,the stock makes a compelling BUY argument also as a value play ,since the company's total market cap is still quite lower than its smaller peers.
    Included in this great package deal (last but not least!!) is a very highly qualified
    Management team that has very successfully handled every hurdle the company has had to face (including the almighty U.S.Department of Justice) and has been
    taking all the necessary steps to diligently move forward with its merger with US Airways.
    So there!!!! Iam long all Stifels Nicolaus recommendations,but was surprised not to see AAL in their list.
    26 Feb, 07:39 AM Reply Like
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