US investors remain skittish on airline stocks until they demonstrate sustainability in a downturn

The US airline industry is still in the early stages of structural reform that is providing the foundation for a shift in business models guided by long-standing metrics for the majority of successful publicly traded companies - pretax margins, return on invested capital, balance sheet leverage and capital deployment.

Those measurements were absent in the airline business until recently as airlines constantly bounced between boom and bust cycles that left the US airlines heavily leveraged, largely unprofitable and at a huge product disadvantage compared with their international airline peers.

According to a panel discussion at CAPA's Americas Aviation Summit 2015 in Las Vegas, gseneral sentiment among the investment community is that while significant changes have occurred to transform the US airline business, the industry needs to survive the next recession in order to prove that the structural reforms that have occurred during the last few years are indeed a mainstay. That is a tough ask.