US Big 3 airlines: improving metrics & Delta broadens brand

Premium Analysis

The two largest US airlines measured by system-wide departing frequencies, American and Delta, are arguably at different phases in their evolution. Delta recently marked the ten-year anniversary of its merger with Northwest Airlines, and its competitors that are also the products of recent US airline consolidation - American and United - consistently say that they are working to close the margin gap with Delta.

American, which struggled with a lagging unit revenue performance and margin decline in 2018, is forecasting a higher earnings per share (EPS) than Delta in 2019, driven by USD1 billion in revenue improvements and USD300 million in cost savings.

Although American's debt to EBITAR ratios remain above Delta's, its P/E remains higher than Delta, and that's been the case for quite some time. The obvious question is do investors believe that Delta has attained a certain level of maturity that the still-merging American and United have yet to achieve?

Delta is not resting on its laurels, and the airline arguably has the space to think outside the box as it looks toward the future. Its vision is to become a leading consumer company - something unheard-of for an airline when Delta merged with Northwest a decade ago.

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