Alaska Airlines: The One Airline Stock to Buy Now

by Susan J. Aluise | July 29, 2011 5:30 am

alaskaair Alaska Airlines: The One Airline Stock to Buy NowFace it: making money in airline stocks right now is about as easy as herding cats.  Margins are slim, fuel prices are devouring earnings, and passengers are howling in protest over a plethora of fees and often poor customer service.  If you want proof that the industry’s woes are hammering airline stocks, look no further than the Guggenheim Airline ETF (NYSE:FAA[1]), which set a new 52-week low of $30.49 on Thursday.

But as jazz legend Duke Ellington once said, “A problem is a chance for you to do your best.” And Alaska Airlines (NYSE:ALK[2]) seems to have taken that motto to heart.  The company prides itself in taking good care of its customers: it topped JD Powers’ recent airline customer satisfaction survey for the fourth straight year. The traditional network carrier posted particularly high marks for flight crew, boarding, deplaning, baggage, check-in, and reservations.

It’s no secret that customers have become increasingly irate over the high cost and low customer service of legacy carriers like Delta (NYSE:DAL[3]), United Continental (NYSE:UAL[4]), American (NYSE:AMR[5]) and US Air (NYSE:LCC[6]).  Alaska has managed to woo passengers with lower baggage fees ($20 for the first three bags), an enviable 90.7% on-time performance – second only to Hawaiian Airlines (NYSE:HA[7]) and blowing away the industry average of 77.1%.

And when glitches do happen, the airline makes sure to communicate with passengers.  When a major IT glitch grounded 150 flights back in March, the airline updated customers via social media and offered to compensate the 12,000 passengers whose travel was disrupted.

While customer satisfaction is critically important for every airline, Alaska’s stockpile of goodwill isn’t the only reason the stock is worth buying. Here are three more reasons ALK might warrant a place in your portfolio:

 

As of this writing, Susan J. Aluise did not hold a position in any of the stocks named here.

Endnotes:
  1. FAA: http://studio-5.financialcontent.com/investplace/quote?Symbol=FAA
  2. ALK: http://studio-5.financialcontent.com/investplace/quote?Symbol=ALK
  3. DAL: http://studio-5.financialcontent.com/investplace/quote?Symbol=DAL
  4. UAL: http://studio-5.financialcontent.com/investplace/quote?Symbol=UAL
  5. AMR: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMR
  6. LCC: http://studio-5.financialcontent.com/investplace/quote?Symbol=LCC
  7. HA: http://studio-5.financialcontent.com/investplace/quote?Symbol=HA

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