Best Airline Stock for 2011 (DAL, UAL, AMR, LUV, AAI, LCC, JBLU, ALK)

The year just passed has been a good one for US air carriers. For the first time in several years, virtually every carrier earned a profit and airline stocks posted gains ranging from a few percent to more than 100%.

The generally good year could be partially attributed to an improving US economy that encouraged more people to travel by air. Another part of the increase was due to the increased revenue from each passenger, due mostly to new fees and charges for services that the airlines once offered at no charge. And while some passengers may complain about the nickel-and-dime approach, the fees for checked bags and snacks kept the headline price of tickets low, attracting more passengers who are now being trained to expect less and like it.

Major US airlines like Delta Air Lines Inc. (NYSE: DAL) and United Continental Holdings (NYSE: UAL) both posted solid gains in 2010. AMR Corp. (NYSE: AMR), parent of American Airlines, continued to struggle, finally turning a profit in its September quarter. Regional carrier Southwest Airlines Co. (NYSE: LUV), which expects to complete its $1.4 billion acquisition of AirTran Holdings, Inc. (NYSE: AAI) in the second quarter of 2011, posted a share price gain of almost 20% for the year. Other regional airlines, US Airways Group, Inc. (NYSE: LCC), JetBlue Airways Corp. (NASDAQ: JBLU), and Alaska Air Group, Inc. (NYSE: ALK), saw even better share price gains.

Here’s a short table showing the tickers, the current price, the mean target price from Thomson Reuters, the implied upside to that target, and the 52-week trading range. We’ll have some comments on these companies following the chart.

Stock Current Target Implied Gain 52-week Range
DAL 12.60 17.27 37.06% 9.60 – 14.94
UAL 23.82 36.45 53.02% 12.13 – 29.75
AMR 7.79 10.59 35.94% 5.86 – 10.50
LUV 12.98 15.98 23.11% 10.42 – 14.32
LCC 10.01 14.00 39.86% 4.47 – 12.26
JBLU 6.61 8.13 23.00% 4.64 – 7.60
ALK 56.69 65.73 15.95% 31.24 – 59.59