Southwest Airlines Co. (LUV), United Continental Holdings Inc (UAL): Has Delta Air Lines, Inc. (DAL) Become the Perfect Stock?

Delta has ridden the wave of extremely strong performance among airline stocks in general. Yet to an even greater extent that its peers, Delta Air Lines, Inc. (NYSE:DAL) has been able to convert ancillary income from baggage fees and other charges into profits. By contrast, rival United Continental Holdings Inc (NYSE:UAL) has reaped plenty of income from baggage fees but remains mired in the challenges of fully integrating its merger from a few years ago. Southwest Airlines Co. (NYSE:LUV), long the darling in the industry from an investor perspective, finds itself on the outside looking in, in large part because it has chosen not to charge revenue-producing fees like per-bag charges.

But Delta isn’t without faults. Lately, it has spent huge amounts of money on capital expenditures, and between that and debt repayments, it doesn’t have that much money left for shareholders. That explains its negative shareholder equity, and it heightens the need for Delta Air Lines, Inc. (NYSE:DAL) to boost cash flow to leave more for investors in the future.

Delta’s recently proposed joint venture with Virgin Atlantic could help Delta Air Lines, Inc. (NYSE:DAL) compete better on trans-Atlantic routes. In some ways, the move resembles a lighter version of what American and US Airways Group, Inc. (NYSE:LCC) are doing in their merger, as it captures some of the same benefits without drawing quite as much antitrust attention as a full-scale merger would. Delta hopes the deal will go through by the end of the year.

For Delta to improve, it needs to get its fundamentals back in line with its prospects. If it can find ways to grow not just revenue but also profits, with an emphasis on providing shareholder value, then Delta Air Lines, Inc. (NYSE:DAL) has room to soar back toward perfection.

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No stock is a sure thing, but some stocks are a lot closer to perfect than others. By looking for the perfect stock, you’ll go a long way toward improving your investing prowess and learning how to separate out the best investments from the rest.

The article Has Delta Air Lines Become the Perfect Stock? originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Southwest Airlines.

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