Delta Air Lines, Inc. (DAL), Southwest Airlines Co. (LUV): Take Advantage of the Recovery of This Sector

Furthermore, the company has reached an agreement with DISH Network Corp (NASDAQ:DISH) to provide free live TV access for customers using iPhone, iPad and iPod touch. This gesture is likely to bring several new customers who enjoy complementary treats.

Lastly, Alaska Air Group has a great relationship with its employees. Alaska Airlines pilots have ratified a five-year contract with the company. Also, Horizon Air, its subsidiary, has reached a tentative agreement on a proposed five-year contract with its flight attendants. I do not foresee any issue between the company’s employees and the employers in the near future. We must remember that the company awarded $88 million in February to its employees for having surpassed the company’s objectives.

Employees tend to perform better at their tasks, and provide better customer experiences when they work in appropriate conditions. Finally, the company is implementing an ambitious expansion plan that includes the inauguration of several routes including:

San Diego – Boise, Idaho. Scheduled to start on November 1.

San Diego – Mammoth Mountain Ski Area, California. Scheduled to start on December 19.

Seattle – Colorado Springs, Colorado. Scheduled to start on November 1.

Seattle – Omaha, Nebraska. Scheduled to start on November 7.

With these routes, the company increases its presence in San Diego and Seattle, one of its main hubs. Hence, the presence of the airline in the west is consolidating. This may bring higher revenues.

My two cents

These companies should bring capital appreciation in the form of dividends and share repurchase programs. Their free cash flow is stable enough to sustain these programs, and investors may expect future hikes. The companies are growing either by inaugurating new terminals or new routes. However, there is strong evidence that indicates that the companies are expanding successfully. Therefore, I recommend having these companies as a way to gain exposure to the airline industry.

The article Take Advantage of the Recovery of This Sector originally appeared on Fool.com and is written by Robinson Roacho.

Robinson Roacho has no position in any stocks mentioned. The Motley Fool recommends Southwest Airlines Co. (NYSE:LUV). Robinson is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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