Swot Analysis Of Air Airlines

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Q3 - OE_Strengths
What do you see as Delta’s particular strengths?
"From an investment standpoint it is the quality of the company, both in terms of management and operations as well as the financial structure of the company. If we took it to a different level it's like a good brand, high-quality company. Personally I like flying Delta better than other airlines."
Q4 - OE_Weaknesses
What do you see as Delta’s particular weaknesses?
"Again from an investment standpoint, in the past it has felt like sometimes they can be overly optimistic in terms of guidance, which is good in terms of setting a high bar for the company. But it can often leave investors more cautious on the underlying fundamentals of the business because of earnings revisions
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"From a customer standpoint, providing an on-time, reliable product to keep their revenue premium to the industry and superior operating structure. From an investment standpoint, managing capex and investments in aircraft combined with solid aircraft utilization to generate the best returns for investors."
What aspects of the company’s strategy do you believe represent the biggest challenges for Delta?
"Given their outperformance over an extended period of time, there is a general concern that Delta is at peak operating performance relative to peers and that over time, others will adopt Delta's playbook and eat away at their competitive advantage. It's just being able to prove out that the playbook they've used in the past is a sustainable way of keeping their competitive advantage in the future as others adopt similar practices."
When do you believe Delta will initially achieve its 16-18% operating margin target?
"2017. Hopefully, they'll achieve it this year."
What level of EPS growth do you think Delta can sustain through the
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Southwest. Ultimately the goal is that Delta gets viewed along with other high-quality industrial companies like rail companies, and even to a certain extent the aircraft manufacturers. But it's just hard to make that today, given the multiple disparity and the volatility of the stock, it's hard to say that it's a real peer even though if you line them up on an ROIC standpoint and performance over the past couple years they look very similar. Limit it to Alaska and Southwest."
Q12a - OE_PreferredInvestment
Thinking about Delta along with its peers, which company is your preferred investment?
"Delta and Southwest."
Q12b - OE_PreferredInvestmentWhy
Why do you say that? [Reasons for preferred investment]
"Delta and Southwest. Sustainability of free cash flow. Sustainability of operating margin structure. Competitive advantages in hubs and network structure that will allow both airlines to maintain their relative margins to peers over time."
Why did you give that rating? [Reasons for overall opinion of the airline industry as an investment opportunity]
"4 [6-pt scale]. Because it's a relatively mature industry in the US, investors see pricing power as a proxy for margin sustainability. There is a concern that the level of general capacity growth that's forecasted over the next couple years will negatively impact pricing and therefore make investors question the sustainability of margins ex-fuel, excluding any change in

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