Out Fox The $treet

Interesting video from American Airlines (AAMRQ) uploaded to YouTube saying the merger is "cleared for takeoff". Anybody following this blog knows that Stone Fox Capital has been bullish on this merger with an investment in US Airways (LCC) . As the largest airline in the world, the new American Airlines Group (LCC ) should eventually claim the largest valuation as well. Disclosure: Long LCC. Please review the disclaimer page for more details. 

The surprising announcement on Nov. 12 that the Department of Justice, or DOJ, had agreed to a settlement allowing the merger of US Airways ( NYSE: LCC     ) and AMR Corporation ( NASDAQOTH: AAMRQ     ) to form the new American Airlines Group, with an expected close in December 2013. With this settlement in place and the merger proceeding, investors can now review three important numbers for the new American Airlines, which place the new company at very favorable multiples against industry leader  Delta Air Lines  ( NYSE: DAL     ) . Slot pairs manageable The DOJ agreement obliges US Airways and AMR Corp. to give up 52 slot pairs at Washington Reagan National Airport, or DCA, and 17 slot pairs at New York LaGuardia Airport, or LGA. The new American also has to divest two gates and related support facilities each at Boston Logan International Airport, Chicago O'Hare International Airport, Dallas Love Field, Los Angeles Int...

When reviewing the numbers of Delta Airlines ( NYSE: DAL     ) , you might be shocked that it's, well, an airline. The domestic airline with the largest market cap is starting to act like a real corporate citizen: paying down debt, paying a dividend, and actually buying back company stock. And amazingly, it's achieved this success despite stubbornly high oil prices. Just last year, Delta bought a refinery in an attempt to dramatically reduce the costs of jet fuel. What originally looked like a desperate, ill-conceived move has become almost an afterthought, with Delta and other airlines reporting strong profits despite the high price of fuel. Even bankrupt  AMR (NASDAQOTH: AAMRQ) and its prospective partner  US Airways ( NYSE: LCC     ) are generating huge gains, despite fuel costs and a merger blocked by the Department of Justice. Read the full article here . Disclosure: Long LCC. Please review the disclaimer page for more details....

More signs of strong pricing discipline in the airline sector make the legacy stocks look worth pursuing. After well-documented decades of losses, the airlines appear more inclined to focus on profits than on passenger growth. Recently, both Orbitz ( NYSE: OWW     ) and Travelocity announced that Thanksgiving airfares were expected to be 7%-9% higher than fares from last year. This trend might not be welcome news to the people planning to fly over the holiday period, but it should be very encouraging news to airlines. Yet, online travel sites such as Orbitz might struggle if the higher fares push some travelers to seek alternative transportation. Read the full article here . Disclosure: Long LCC. Please review the disclaimer page for more details. 

In the business of buying, leasing, and eventually selling multimillion-dollar machines, the ability to buy and sell at the right time can be as crucial as leasing the machine for a profit during the holding period. In the case of AerCap Holdings ( NYSE: AER     ) , the management team has consistently done an excellent job of acquiring planes through alternative methods rather than paying high prices directly to airplane manufactures and selling the planes at profits before they become outdated and difficult to unload. Due to key mergers and acquisitions over the years, AerCap Holdings has built itself up to one of the largest airplane leasing firms in the world. The company currently owns or manages 368 aircraft with an average age of 5.3 years and a lease term of 6.6 years. Not only has management been successful at plane trading, but it also was successful in buying debt at a discount and repurchasing shares substantially below book value. Read the full ...

Unfortunately it doesn't appear that The Street video can be embedded, but it is very interesting to see the CEO of JetBlue (JBLU) make it clear that he wants access to the Reagan National airport. Remember that the Reagan National airport slots dominated by US Airways (LLC) and American Airlines (AAMRQ) are prime reasons for the DOJ lawsuit to stop the merger. It is clear that it would be very easy to transition some airport slots away from that merged entity in favor of JetBlue and probably just about every other domestic airline. The DOJ lawsuit just doesn't hold water as any airport that becomes non-competitive will quickly attract further airlines. See the video here . Disclosure: Long LCC. Please review the disclaimer page for more details. 

With all of the debates regarding the US Airways ( NYSE: LCC     ) merger with American Airlines ( NASDAQOTH: AAMRQ     ) , the market has missed the strong results of US Airways as a stand-alone company. Though the airline might need the merger to compete equally with the other major carriers, US Airways appears poised for better days regardless. The companies originally announced the merger back in February, but the Department of Justice (DOJ) shocked the markets by filing to block the merger in August. The stock plummeted on fears that the inability to further consolidate the industry would lead airlines to the price wars of the past. The August data doesn't suggest that scenario is actually occurring, or will occur. Read the full article here . Disclosure: Long LCC. Please review the disclaimer page for more details. 

The shocking announcement that the Department of Justice filed a lawsuit to block the merger of American Airlines and US Airways (NYSE: LCC ) caused most of the airlines to drop. While the blocking of the merger could have a significant impact on American Airlines, it could create opportunities for the smaller airlines to either be bought out in smaller consolidation deals or gain from the interruption and potential cutbacks at more » Disclosure: Long LCC. Please review the disclaimer page for more details. 

For those interested in the pending merger between US Airways (LCC) and American Airlines (AAMRQ) , Minyanville has an interesting interview with analyst Wayne Plucker at consultant firm Frost & Sullivan. The best part of the interview is the he discusses a bigger impact to job losses and not costs to consumers. In fact, he makes the claims that ticket prices aren't high enough. Though some of those costs are being made up for with ancillary charges, the DOJ has it wrong about higher costs to consumers. Heck, in some cases consumers need to pay higher prices and that's just the hard cold facts that airlines undercharged in the past. If the new American Airlines were to dramatically raise rates for any routes and existing rates are so attractive, other airlines will swoop in to take market share. After this consolidation, the industry is still left with Delta Air Lines (DAL) and United Airlines (UAL) as equal competitors and Southwest Airlines (LUV) , JetBlue (JBLU) , ...

The shocking suit to block the AMR Corp ( AAMRQ.PK ) and U.S. Airways ( LCC ) merger roiled the market, sending Delta Air Lines ( DAL ) tumbling 7%. While a big part of the incentive for buying airlines has been the benefits of industry consolidation, it doesn't appear that the Department of Justice blocking this merger will prevent the intent of reduced competition. Over the last few years, the airlines appear more cognizant that focusing on profits is paramount over increasing competition. Does blocking this merger change that incentive? Ultimately, all of the airlines can probably be bought outside of American Airlines, whether based on the potential for further consolidation in the smaller, regional airlines or the potential that the third largest airline, American, struggles to emerge from bankruptcy. Delta could ultimately be the biggest beneficiary, as the airline won't face strong competition from the combined entity allowing it and United Airlines to...

Anybody following this blog knows that Stone Fox Capital has been bullish on airlines for a while now due to all of the consolidations in the industry. The lower competition has made the industry attractive for possibly the first time in the history of the industry. The below airline analyst from Wolfe Research makes some interesting points regarding the airline industry and oil prices. Interesting to see the point regarding the hedging book as being a liability. Basically unless you're the best hedger in the industry, all a hedge does is rack up expenses over time. The best part was possibly the Fast Money guy knocking down the value on the airline stocks while the research analyst was clear that the stocks remain dirt cheap. Disclosure: Long LCC. Please review the disclaimer page for more details. 

Anybody following this blog should know by now that the consolidation in the airline industry makes it investable for the first time possibly ever. The major airlines, including Delta Air Lines (NYSE: DAL ) , United Airlines, a subsidiary of United Continental Holdings  (NYSE: UAL ) , and the ongoing combination of US Airways (NYSE: LCC ) and American Airways have helped dramatically reduce the competition in the sector. The biggest threat to strong profits more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

According to the recent monthly results , bankruptcy has been good to AMR Corp. (NASDAQOTH: AAMRQ.PK ) . The company just reported a dramatic turnaround from last year for May and should signal that the combination with US Airways (NYSE: LCC ) will be a very profitable one. The airlines expect to finalize the merger in the next few months, which will lead to numerous synergies estimated at around $1 billion. Apparently though, the more » Disclosure: No positions mentioned. Please review the disclaimer page for more details.

Even with a fundamental shift in the airline sector, analysts are quick to downgrade US Airways Group (NYSE: LCC ) at market low earnings multiples. Sure the airline industry has historically struggled to make profits, but the recent consolidation provides hopes for a liberated industry. The company operates more than 3,100 flights per day and serves 198 communities around the globe. US Airways expects to close the merger with AMR more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

One of the biggest surprises this month had to be the announcement by Delta Air Lines (NYSE: DAL ) that it planned to return as much as $1 billion to shareholders over the next three years. How could it be possible that one of the worst industries around is now able to return cash to shareholders? The airline sector has seen a major shift towards profitability after the financial crisis forced more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Only a month ago this article theorized that airlines might finally be investable. Fortunately both Delta Airlines (NYSE: DAL ) and US Airways Group (NYSE: LCC ) obliged the theory by reporting strong Q1 earnings. A quarter that is typically the weakest actually turned solidly profitable for two of the market leaders. In fact, Delta claimed the highest profit in over a decade. Unless new competition comes out of left field or more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

While  Delta Air Lines ( DAL )  is set to become the world's 3rd largest airline when  U.S. Airways Corp. ( LCC )  and  AMR Corp ( AAMRQ.PK ) complete a merger later this year, the company could be set to profit the most from a slew of airlines mergers. In essence the domestic airlines market will become a three-headed monster with  United Continental Holdings ( UAL )  also competing for the top spot. Delta Airlines has already integrated a major merger with Northwest Airlines and stands to benefit from the other two market leaders struggling to complete the integrations of major mergers. United Airlines and Continental Airlines are still working through integration issues from a merger finalized already. In addition, Delta is working to finalize the purchase of Pinnacle Airlines out of bankruptcy. The deal has several plans that reduces costs and increases the focus on profitable routes which is refreshing for this industry. All of these mergers...

After decades of losing money and bankruptcies to all the major players, the industry may have finally consolidated enough to reach consistent profitability. The big signal might have been the AMR Corp (NYSE: AAMRQ) bankruptcy back in November. With the parent of American Airlines finally succumbing to reorganization and a merger with U.S. Airways (NYSE: LCC ) , the industry might have all the major players on board for a profitable more » Disclosure: No positions mentioned. Please review the disclaimer page for more details.