Summary
- Delta has a strong domestic market presence.
- The company's low cost strategy allows it to operate with higher margins than its competitors.
- The airline industry's growth rate is consistent and growing.
By Kelvin Li of Queen's Capital
With the recent drop in oil prices, investors are seeking for opportunities that can capitalize on the supply gut. The industry I immediately began to look at was the airline industry. The industry has approximately 30% of operating costs in jet fuel. Lower prices signal strong growth in the coming year as jet fuel is a product of crude oil. After looking at a couple of companies, Delta Air Lines (NYSE:DAL) demonstrates the greatest potential for growth. The following 3 points reinforce my bullish view.
Strong Domestic Presence
With 70% of its revenues generated within North America, Delta Air Lines has proven to be a major player. They have specifically excelled in the United States and have obtained a market share of 20.9%. See illustrations below.
(capitaliq.com)
