In this article, we will take a look at the 5 airline stocks billionaires are piling into. To read our analysis of the recent technology trends, and market activity, you can go to the 10 Airline Stocks Billionaires Are Piling Into.
5. Hawaiian Holdings, Inc. (NASDAQ:HA)
Number of Billionaire Holders: 8
Honolulu, Hawaii-based Hawaiian Holdings, Inc. (NASDAQ:HA) is Hawaii’s biggest and longest-serving airline offering nearly 150 daily flights within the Hawaiian Islands, and nonstop flights between Hawaii and 15 U.S. gateway cities, as well as flights connecting Honolulu and American Samoa , Australia , Cook Islands , Japan , New Zealand , South Korea, and Tahiti.
On December 3, Alaska Air Group, Inc. (NYSE:ALK) and Hawaiian Holdings, Inc. (NASDAQ:HA) announced an agreement under which Alaska Air Group, Inc. (NYSE:ALK) will acquire all outstanding shares of Hawaiian Holdings, Inc. (NASDAQ:HA) for a cash consideration of $18.00 per share which implies a transaction value of nearly $1.9 billion, including debt.
The transaction price implies a potential upside of 29.96% based on Hawaiian Holdings, Inc. (NASDAQ:HA) share price as of December 7. The companies expect the transaction to “unlock more destinations for consumers and expand choice of critical air service options and access throughout the Pacific region, Continental United States and globally.”
Following the announcement, Deutsche Bank analyst Michael Linenberg upgraded the rating for Hawaiian Holdings, Inc. (NASDAQ:HA) shares to ‘Buy’ from ‘Hold’ and raised the price target to $16 from $4.
4. Alaska Air Group, Inc. (NYSE:ALK)
Number of Billionaire Holders: 8
Seattle, Washington-based Alaska Air Group, Inc. (NYSE:ALK) is an airline holding company that operates two airlines, Alaska, and Horizon, and McGee Air Services, an aviation services provider. Alaska operates a fleet of narrowbody passenger jets on primarily longer stage-length routes. It contracts with Horizon and SkyWest for shorter-haul capacity and receives all passenger revenue from those flights.
On December 3, Alaska Air Group, Inc. (NYSE:ALK) and Hawaiian Holdings, Inc. (NASDAQ:HA) announced an agreement under which Alaska Air Group, Inc. (NYSE:ALK) will acquire all outstanding shares of Hawaiian Holdings, Inc. (NASDAQ:HA) for a cash consideration of $18.00 per share which implies a transaction equity value of nearly $1.0 billion.
Alaska Air Group, Inc. (NYSE:ALK) expects to finance the acquisition through cash on hand and new debt with the transaction expected to close in 12-18 months, subject to regulatory clearance and approval from target company shareholders. The company expects $235 million of run-rate synergies and expects “high single digits accretion to earnings within first two years.”
According to the Insider Monkey data on 910 leading hedge funds, 28 hedge funds were long Alaska Air Group, Inc. (NYSE:ALK) and held shares valued at $171 million, as of Q3 2023. Ric Dillon’s Diamond Hill Capital was the largest hedge fund shareholder with ownership of 1.16 million shares valued at $43 million.
3. Delta Air Lines, Inc. (NYSE:DAL)
Number of Billionaire Holders: 9
Delta Air Lines, Inc. (NYSE:DAL) is a leading global airline serving more than 200 million passengers on an annual basis across its global network of more than 280 destinations across six continents. The company employs more than 100,000 people and operates over 4,000 daily flights.
On October 12, Delta Air Lines, Inc. (NYSE:DAL) released its financial results for Q3 2023. Its revenue increased by 11% y-o-y to $15.5 billion, while net income surged by 59% y-o-y to $1.1 billion. It generated a normalized EPS of $2.03 for the quarter, which exceeded the consensus estimates by $0.08.
In its Q3 2023 investor letter, Patient Capital Management, a value investing firm, made the following comments about Delta Air Lines, Inc. (NYSE:DAL):
“Historically, airlines have passed on higher fuel prices to customers with a lag. We see Delta as a premium global consumer brand that is materially misunderstood by the market. The market still sees airlines as a cyclical, bankruptcy prone industry. An improved supply-demand picture, management discipline and a better business mix make Delta a more resilient business. Their loyalty program with American Express is a source of stable and growing revenues with $6.5B in remunerations this year with a goal of reaching $10B by the end of the contract in 2028. Premium and ancillary service revenue should generate 65-70% of the total in the next year or two. The company should continue to generate consistent midteens returns on capital. As the market begins to understand, we believe the company will continue to be rewarded. On top of this, free cash flow is expected to expand generating a cumulative ~$11B from ’23-’25, or one-half of its current market cap. As the company pays down debt while growing the dividend and eventually resuming share repurchases, we think the stock will continue to trend higher.”
2. Southwest Airlines Co. (NYSE:LUV)
Number of Billionaire Holders: 11
Southwest Airlines Co. (NYSE:LUV) operates Southwest Airlines, a major passenger airline that provides scheduled air transportation in the United States and near-international markets. It had a fleet of 817 aircraft operating across 121 airports across 11 countries.
On October 26, Southwest Airlines Co. (NYSE:LUV) released its financial results for Q3 2023. Its revenue increased by 5% y-o-y to $6.5 billion, while net income shrunk 30% y-o-y to $193 million. The normalized EPS of $0.38 missed consensus estimates by $0.01.
On November 16, the Board of Directors of Southwest Airlines Co. (NYSE:LUV) declared a quarterly dividend payment of $0.18 per share. Its shares currently have a dividend yield of 2.46% based on the share price on December 7.
As of Q3 2023, 33 of the 910 hedge funds tracked by Insider Monkey were long Southwest Airlines Co. (NYSE:LUV) and held shares worth $334 million. Richard Oldfield’s Oldfield Partners was the largest shareholder with ownership of 2.7 million shares valued at $74 million.
1. American Airlines Group Inc. (NASDAQ:AAL)
Number of Billionaire Holders: 13
Fort Worth, Texas-based American Airlines Group Inc. (NASDAQ:AAL) is a holding company operating a major network air carrier, providing scheduled air transportation for passengers and cargo through its hubs. As of December 31, 2022, it operated 925 mainline aircraft supported by its regional airline subsidiaries and third-party regional carriers, which together operated an additional 536 regional aircraft.
On October 19, American Airlines Group Inc. (NASDAQ:AAL) released its financial results for Q3 2023. It generated operating revenues of $13.5 billion and a net loss of $545 million. Its normalized EPS of $0.38 surpassed consensus estimates by $0.13.
American Airlines Group Inc. (NASDAQ:AAL) has been on a mission to strengthen its balance sheet. As part of this plan, the company has reduced its debt level by nearly $10.9 billion from the peak levels in mid-2021. This includes debt reduction of $1.4 billion in Q3 2023.
As of Q3 2023, American Airlines Group Inc. (NASDAQ:AAL) was the most sought-after stock among billionaires on our list of 10 airline stocks billionaires are piling into, as 13 of the billionaires tracked by Insider Monkey held its shares, valued at $609 million. Jim Simons’ Renaissance Technologies was its largest shareholder with ownership of 22.4 million shares valued at $287 million.
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