Top picks from S&P: US Airways
The recent merger and strong demand drives growth at the airliner.
By Jim Corridore, S&P Capital IQ, The Outlook
Our positive outlook for U.S. Airways (LCC) reflects improving air travel demand as well as our view that it has adequate cash to fund operations and pay debt obligations during the next 18 months. We believe industry capacity cuts in the past two years will support rising fares.
We think strong demand will drive additional attempts to raise fares over the next year. We also expect yields to benefit from increased corporate travel and less fare sales activity than usual.
U.S. Airways is the fifth largest airline operating in the U.S. with primary hubs in Charlotte, Philadelphia and Phoenix. The company considers itself to be the largest U.S. low-cost carrier as measured by revenue passenger miles as well as the only low-cost carrier with a significant international presence.
In February, U.S. Airways agreed to merge with AMR Corp., parent of American Airlines, which we view positively. The new carrier would operate under the American Airlines name, with U.S. Airways shareholders receiving about 28% of the combined company.
A merger solves the airline's international network problems and allows it to compete head to head with other U.S. global network carriers, in our view. U.S. Airways expects the transaction to close in the third quarter of 2013.
More from TheStockAdvisors.com
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
4 analysts downgrade the stock the day after a disappointing quarterly report.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.