TAKE 120: No "LUV" for Southwest - Delta the Better Buy
Monday, January 14, 2013 - 02:31
Jan. 14 - Fund manager Craig Hodges says this will be the year airlines rebound and feels Delta's revenue growth and more attractive valuation make it his choice over Southwest
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It's time for another tape what's funny that's to edit them giving Craig Hodges to tell me why he's flying high on airlines. And the -- his toys that delta over southwest. Craig airlines aren't those stocks to trade and not to own. -- the perception is that there -- only -- but they've really done a tremendous job of changing their business model. And it's and it's it's kind of a new world for for the airlines and I think it's going to be very profitable going forward. Number one reason why you like delta over southwest. Just -- the fact that they can they've done so poorly and come out of bankruptcy. There on the verge of making some serious money they'll make -- two dollars and 66 cents a share. This next year which is only trading up five times earnings southwest traits about 1112 times -- So it's a much cheaper and I think there's also some more some faster growth it felt. Some of that might be baked into the stock performance delta outperform southwest over the past year but there's more up -- thing. I believe so yeah they're they're doing a lot of deals they've they've bottom refinery that's a very -- thing -- doing -- make that made a deal with Virgin Atlantic. They're doing a lot of really good things that we think it's going to be able to get that stock going for the first time quite awhile. Greg you know file a -- fly and see this week at a Dallas traveling from New York it's cheaper but -- and southwest so -- -- that it checked out the bottom line. Yeah -- -- also the very sophisticated pricing models and you know pricing it in certain markets can't be cheaper but. All in all it they pretty much match match although all the different airfares they match and with other airlines so it's pretty much uniform. Legacy costs are not an issue for delta anymore right. I know with with them coming out of bankruptcy they've reorganized all that -- got -- contracts and and much lower cost basis. -- before that's an advantage they have of overall the other -- airlines did not file for bankruptcy how to read his book. A revenue it look like they're they're increasing I think you're seeing about anywhere from four to 6% growth each each quarter. So that you're seeing traffic counts go laughter. Capacity is still being strong kind of the best books and area. Are -- to Craig Hodges for his take on flooding delta verses out well I'm Rhonda schaffler at the writers.
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