First idea post so still figuring out these controls but here we go...
Airlines can be very sticky and annoying stocks that go through very odd cycles. But the fundamentals of the companies can be even weirder since the operate in a highly regulated market that was supposedly de regulated. I was considering going long spirit since the merger breakdown has occurred. But as I was looking deeper into the company to see if a long trade could be justified I found something very interesting that might make a better trade.
My original idea for going long spirit despite the rising debt on a year over year basis is that they still use some of the most desirable aircraft on the market a mix of narrow body a320 neo variants that airbus cannot make enough of and some kind of buyout or asset based valuation would make sense for the airline. Basically looking at the value of the airline the same way jet blue did but also adding the value of its west coast gates along with its aircraft value and plethora of A320 trained pilots. I started looking at other airlines and financials to see if it would make sense compared to other airlines. I think I found a trade that makes more sense but is based more on fundamental math of the company than a gut feeling like with spirit.
Tell me what you guys think
AAL
and
DAL
2 of the largest US airlines have both been beaten down by the pandemic and increased gas prices. Spirit was not able to come back to positive margin in the last few reports but AAL and DAL have. Except DAL is trading at a PE ratio of between 5 and 6.5 while American is near 13.5 yet they have a margin of less than 5 % while Deltas margin is closing to 13%. Still doing research to see what can explain this huge difference in PE and margin between the 2 companies. Do you think Delta is a good play with this observation??
Airlines can be very sticky and annoying stocks that go through very odd cycles. But the fundamentals of the companies can be even weirder since the operate in a highly regulated market that was supposedly de regulated. I was considering going long spirit since the merger breakdown has occurred. But as I was looking deeper into the company to see if a long trade could be justified I found something very interesting that might make a better trade.
My original idea for going long spirit despite the rising debt on a year over year basis is that they still use some of the most desirable aircraft on the market a mix of narrow body a320 neo variants that airbus cannot make enough of and some kind of buyout or asset based valuation would make sense for the airline. Basically looking at the value of the airline the same way jet blue did but also adding the value of its west coast gates along with its aircraft value and plethora of A320 trained pilots. I started looking at other airlines and financials to see if it would make sense compared to other airlines. I think I found a trade that makes more sense but is based more on fundamental math of the company than a gut feeling like with spirit.
Tell me what you guys think
AAL
and
DAL
2 of the largest US airlines have both been beaten down by the pandemic and increased gas prices. Spirit was not able to come back to positive margin in the last few reports but AAL and DAL have. Except DAL is trading at a PE ratio of between 5 and 6.5 while American is near 13.5 yet they have a margin of less than 5 % while Deltas margin is closing to 13%. Still doing research to see what can explain this huge difference in PE and margin between the 2 companies. Do you think Delta is a good play with this observation??