Delta shares gained nearly 20% in 2010, gaining back more than half the share price loss over the past five years. Delta’s P/E ratio for the trailing twelve months is 19.41, while its forward P/E is just 5.62. Analysts appear to think that Delta’s best year is behind it.

United shares gained more than 80% in 2010 as the company completed its acquisition of Continental. United’s trailing P/E ratio is 13.07, and its forward P/E is just 4.86. Like Delta, United may have had a very good year, but 2011 could be problematic.

AMR shares finished the year about where they started. The string of quarterly losses yields no meaningful P/E ratio, though the forward P/E is set at 20.76. The stock’s price target is barely above it’s 52-week high, but there’s still a lot of space between the current price and the target price. Growth could be very slow.

Southwest shares gained about 20% in 2010, but the acquisition of AirTran gives the airline a position in Atlanta, which it has lacked until now. The stock’s trailing P/E ratio is 22.03, and its forward P/E is 14.57, the best of any of the airlines covered here.

US Airways shares more than doubled in 2010, to lead the industry. The stock’s trailing P/E is 4.74 and its forward P/E is just 3.86. Based on its performance in 2010, that appears to be a rather gloomy outlook. But US Airways’ performance was based on two quarters where it lost money, just not as much as expected.

JetBlue shares gained about 20% in 2010, but profits have been small. The stock’s trailing P/E ratio is 21.26, and the forward P/E is 11.86. A lukewarm outlook if ever there was one.

Alaska Air shares gained a bit more than 60% in 2010. Earnings beat estimates in three of the last four quarters, but there’s not a lot of growth in the forecast for next year. Trailing P/E is 10.06, and forward P/E is 8.15. Again, not exactly nosebleed territory.

For 2011, the best airline stock should be Southwest. The acquisition of AirTran is a huge plus for the company. But the airlines business is fickle, and just one good year in the last several is no particular reason for investors to see a bandwagon where none exists. Fuel costs, competitive pricing, and a slow-growing economy are potent forces for airlines to have to deal with.

Paul Ausick