The Big 3 US airlines work to bolster their sagging valuations; the investor base is still sceptical

In 2015 US airlines posted a collective profit of approximately USD19 billion, continued to de-risk their balance sheets, and generated approximately USD10 billion in free cash flow. Additionally, most of those companies expanded their return on invested capital and increased shareholder returns.

Management of the large three US airlines has tirelessly stressed the transformation that has occurred in the industry during the last few years. But the message has fallen on deaf ears with investors. The valuation of those companies has endured pressure during the last year as investors seek to understand the relationship between increasing capacity and falling passenger unit revenues.

For now, it seems that the all airlines can do is to continue to stress what those companies deem as fundamental shifts in the business. In the meantime, airline undervaluation could remain a major issue until investors are fully convinced about the durability of the US airline industry.