Delta Air Lines, Inc. (DAL), US Airways Group, Inc. (LCC): United Continental Holdings Inc (UAL)’s Key to a Brighter 2013

Delta is certainly one of the premier air carriers in the US. The company has a market cap of $13.9 billion and registered robust profitability during 2012. Delta is a massive player in the domestic airline sector; additionally it also has a large presence in the international airline market.

Delta Air Lines, Inc. (NYSE:DAL) is a member of the Sky Team global airline alliance, and possesses an international code-sharing agreement with several international carriers. It has one of the highest market shares in the US domestic airline sector, and recently made several initiatives to reduce its operating cost in order to bolster profitability. Efforts include acquiring a refinery to reduce its fuel costs, and buying smaller aircraft to increase operating efficiency.

Similarly, $2.6 billion company US Airways Group, Inc. (NYSE:LCC) also offers air travel to several US and international destinations. The domestic market contributes roughly 43% to its overall revenue, followed by express carriers and international travel. Both airlines compete directly with United locally and internationally.

Better Results Possible?

Keep in mind that the factors mentioned above are not enough to guarantee profitability for an airline. Other macroeconomic factors such as fuel prices and employment rates also determine success or failure. Rising or falling airfares have a very strong relationship with oil prices, since it is the biggest operating cost for the airline industry. If margins fall due to competitive pressures and rising oil prices, the stock price of any airline company will face a stern test.

After discarding the macroeconomic factors, the efforts made by United certainly point at a recovery. I believe that going forward, these initiatives will revive its corporate travel customers. Unless a huge hike in oil prices squeezes margins, the carrier should report a strong 2013.

The article United’s Key to a Brighter 2013 originally appeared on Fool.com and is written by Ashit Gulati.

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