Delta Air Lines, Inc. (DAL): Major Airlines Are Launching A Regional Jet Battle

With this in mind, investors looking for the long term cost benefits from any additional concessions from American Eagle employees may be interested in shares of US Airways Group, Inc. (NYSE:LCC). Since the merger is expected to close in the third quarter, US Airways shareholders could begin to recognize these cost savings in the near future.

The deal with Endeavor Air employees has already been struck and Delta Air Lines, Inc. (NYSE:DAL) can now begin the process of best aligning Endeavor with its own mainline operations. Not only is Delta trying to get cost saving from employees but the airline is also eliminating 50 seat aircraft in favor of more economical 70 plus seat aircraft. With this multi-part strategy Delta is hoping to boost profits by saving on both the labor and fuel sides.

Regional rivalry

Airlines often outsource regional flying but in the case of American Eagle and Endeavor Air, the parent company owns the regional carrier. This has presented a situation where the parent airline tries to get additional concessions to become more cost competitive with other regional carriers. While the employees probably don’t like it, these cost savings are how airlines can increase their bottom lines and build value for shareholders. The next few months may give a hint as to how successful AMR is in getting concessions from American Eagle workers. And in that time, we may also get a better picture of the new American Airlines.

Alexander MacLennan owns shares of Air Canada and Delta Air Lines. He also owns the following options: long $22 Jan 2015 Delta calls, long $25 Jan 2015 Delta calls, long $30 Jan 2015 Delta calls, long $17 Jan 2015 US Airways calls. This article is not an endorsement to buy or sell any security and does not constitute professional investment advice. Always do your own due diligence before buying or selling any security. The Motley Fool has no position in any of the stocks mentioned.

The article Major Airlines Are Launching A Regional Jet Battle originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.