Delta, Continental and Others Have Reported; Are Airlines Turning It Around?

After years of trouble, Airlines look like they might be turning themselves around. On Wednesday, 3 major airline carriers reported somewhat mixed earnings, and Continental Airlines (CAL@CAL | Quote | Chart | News | PowerRating) announced on Thursday that earnings jumped 15% in Q2.

Wednesday, AMR Corporation (AMR@AMR | Quote | Chart | News | PowerRating) reported a 9% increase in net income, but earnings per share actually fell. Delta Air Lines (DAL@DAL | Quote | Chart | News | PowerRating) posted $1.8 billion in profit, in the first earnings report since the company exited bankruptcy. Southwest Airlines (LUV@LUV | Quote | Chart | News | PowerRating) reported that Q2 net profit fell 16.5% from the previous year, but the stock has been gaining since the report.

Continental Airlines and AMR Corporation are both in the Major Airlines sector, while Southwest is a component of the Regional Airlines sector. Delta Airlines would be considered to be in the Major Airlines sector, but because it is a new stock, it does not have a PowerRating (for Investors) and is not in the PowerRatings database.

The Major Airlines industry has a PowerRating (for Industries) of 1, and the Regional Airlines industry has a PowerRating (for Industries) of 3. From 1996-2006 industries with a PowerRating (for Industries) of 3 have achieved annualized returns of 9.87% based on 3-month historical returns, and industries with a PowerRating of 1 have negative returns of -2.31%. By contrast, industries with a PowerRating of 10 have an annualized return of 35.27% based on 3-month historical returns.

Let's take a look at the big names within this major group. Keep in mind that some of these companies are fresh out of bankruptcy, after years of disappearing profits and rising operating costs (oil, anyone?).