Southwest Airlines Co. (LUV), US Airways Group, Inc. (LCC), Delta Air Lines, Inc. (DAL): This Airliner Could Continue to Outperform

Although Southwest Airlines trades at higher valuations compared to the industry average, it boasts a solid balance sheet. Its debt/equity and P/FCF are relatively impressive, and naturally its interest expenses are lower than its peers. American Airlines however seems like a value play. The company is battling bankruptcy, and post-merger it would have access to the credit line of US Airways Group, Inc. (NYSE:LCC). In return, its lenders would get a 70% stake in the joint entity.

In conclusion…

I believe that Southwest Airlines needs to work on its load factor, which is more dependent on marketing strategies and tactical routing of airlines. That said, the fleets of AirTran and Southwest just merged in January, which indicates that the financial benefits of the acquisition haven’t shown up yet. Given its promising future prospects, I think Southwest Airlines is worth a closer look.

The article This Airliner Could Continue to Outperform originally appeared on Fool.com and is written by Piyush Arora.

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