Benzinga’s weekly Stock Wars matches up two leaders in a major industry sector with the goal of determining which company is the better investment.
This week, the duel is between two leaders in the airline industry: Delta Air Lines Inc. DAL and Alaska Air Group, Inc. ALK.
The Case For Delta: This company has its roots in Huff Daland Dusters of Macon Georgia, which made history in 1925 as the world’s first aerial crop-dusting company. Four years later, the company had a new name — Delta Air Service — and a new focus as a passenger carrier. The company expanded over the years with several acquisitions, but it ran into financial problems in 2005 that resulted in a bankruptcy filing that caused it to be delisted from the New York Stock Exchange; it was relisted in 2007 after emerging from bankruptcy.
Today, the company promotes itself by operating flights per day that serve 275 destinations on six continents. However, over the Memorial Day weekend, the Atlanta-headquartered carrier absorbed a public relations nightmare with the cancellation of roughly 700 flights during the four-day holiday stretch, or about 4% of its total flights. The airline went into damage control with a statement that insisted it provided cancelation notices “at least 24 hours in advance of departure time wherever possible,” adding that 94% of passengers last Sunday were placed on alternative flights within an average of 10 hours from their original flights’ departure time.
Last week, Delta announced it was cutting about 100 flights daily between July 1 and Aug. 7, mostly in the U.S. and Latin American markets. But the airline insisted it was not leaving any market, and Reuters reported the company circulated an internal memo that said, “We know there is extreme demand to fly a very full schedule, but we continue to adjust our network and other aspects of our operation to balance customer demand for Delta with the realities of our operating environment.”
In its most recent earnings…