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December 26, 2013

No. 6 Airlines are making money

We're in the money!

U.S. airlines had another banner year in 2013 with record revenues and record profits for the first three quarters of the year.

In the third quarter, Delta led the way with $1.2 billion in profit and even bankrupt American Airlines posted a $289 million profit.

With fuel prices stable for most of the year and the federal government shut-down having a minimal impact on carriers, Wall Street analysts are bullish on the sector.

Wolfe Trahan analyst Hunter Keay said airlines are benefiting from modest economic growth and have maintained capacity discipline this year.

Keay told investors that November unit revenues were "weaker than we expected due to a larger than anticipated impact from the holiday shift into Dec., but Dec. is expected to be much better."

And Wall Street seems to expect the good times to continue for the airlines.

J.P. Morgan analyst Jamie Baker has picked Delta as his favorite legacy airline to continue to produce solid financial results.

"Our view remains a simple one: New American, Delta and United all enjoy 2015 tax-equivalent earnings potential of a similar magnitude (up to $3.50/share)," Baker told investors in a November research note.

-Andrea Ahles

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