Southwest Airlines Co. (LUV): Welcome To The S&P 500 (.INX), Delta Air Lines, Inc. (DAL)

Clearly, the market sees Delta’s S&P spot as positive news. It shows that the S&P’s rewarding Delta’s efforts, and since numerous mutual funds track the S&P and its components, it could create additional buying pressure on Delta stock going forward.

Changing investors minds

Legacy airlines have a major image problem on Wall Street. After a history of bankruptcies and unstable profits, many investors are understandably hesitant to put their money in a legacy airline. But a series of consolidations, improving debt levels, and better capacity management have been boosting airline earnings and fueling an airline stock rally.

Delta Air Lines, Inc. (NYSE:DAL)’s debt reductions and reinstatement of a dividend are helping to bolster its image as different from the historical legacy carrier. Barring any game changing events, look for Delta shares to benefit from its inclusion in the S&P 500 over the next few weeks, as S&P related funds update their holdings. Its new spot in the S&P likely lend the company any long-term advantages, but it does highlight how far the airline has come, and how much stronger it’s gotten.

The article Welcome To The S&P 500, Delta Air Lines originally appeared on Fool.com and is written by Alexander MacLennan.

Alexander MacLennan owns shares of Air Canada, American Airlines, Delta Air Lines, and Gol Linhas. He is also long the following options: $22 January 2015 Delta calls, $25 January 2015 Delta calls, $30 January 2015 Delta calls, $17 January 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 recommends Southwest Airlines.

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