US Airways Group, Inc. (LCC), Delta Air Lines, Inc. (DAL), Spirit Airlines Incorporated (SAVE): The Best Way to Invest in the Airline Industry

The airline industry is rebounding from the lows of 2008. Stronger demand is observed across the board. In addition, economic conditions are improving globally. The latest consumer sentiment reading was at a five-year high. In order for investors to gain exposure to the airline industry, we should consider these companies which present a great investment prospectus.

Valuation

US Airways Group, Inc. (NYSE:LCC) trades with a price-to-earnings ratio of 5.3 compared to the industry’s average of 27.0. Its revenue rose by 6% to $3.4 billion, and its net income rose 43% to $69 million, or $0.26 per share, in the last quarter.

Delta Air Lines, Inc. (NYSE:DAL) trades with a P/E of 17.6, also below the industry’s average. Its revenue remained unchanged at $8.5 billion, but its net income shrunk from $124 million, or $0.15 per share, to $7 million, or $0.01 per share, in the most recent period.

Spirit Airlines Incorporated (NASDAQ:SAVE) is slightly higher in terms of valuation compared to the other two airlines. It trades with a P/E of 19.6, but it is still trading below the industry average. In the last quarter, revenue rose by 20% to $370 million, and net income rose by 30% to $31 million, or $0.42 per share.

A low P/E and increasing sales are appealing metrics for the value-oriented investor. Further, the carriers should continue to grow for the following reasons:

An airline with an increasing presence in the international market

US Airways Group, Inc. (NYSE:LCC) is in the process of merging with American Airlines. Thus, the company will have the greatest presence internationally. Investors should know that long-haul flights have the highest operational margin because airlines use the most fuel-efficient aircraft. The company has announced the board of directors for the new American Airlines.

On other fronts, the company reported a blowout in terms of passenger traffic in May. In the domestic sector, revenue passenger miles (RPMs) rose by 5.6% to 4.2 billion. RPMs for the Atlantic region increased by 8% to 1.1 billion. The carrier has added 3.9% more available seat miles to meet the strong demand. Its load factor increased by 1.7%.

There is strong passenger traffic at US Airways Group, Inc. (NYSE:LCC), and the company is meeting the demand by adding more seat miles through financing of new aircraft. Overall, the carrier will continue to grow because there is a strong demand, and the company is managing its expansion well.