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Strong 3Q16 and Warren Buffett: Airlines Are Soaring Higher

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Strong 3Q16 earnings

The 3Q16 earnings season is almost over, and all major airlines have reported their earnings for the quarter. So now it’s time to find out which airlines fared better than others.

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Stock price movement

Airline stocks have had a great run since 3Q16. In October and November, United Continental (UAL) rose the most at 31.4%. It was followed by Spirit Airlines (SAVE), which rose 30.7%.

American Airlines (AAL) rose 26.9%, and Alaska Air (ALK) rose 24.9% in that same period. Delta Air Lines (DAL) rose 22.4%, Southwest Airlines (LUV) rose 19.9%, and JetBlue Airways (JBLU) rose 16.5%.

But a solid 3Q16 wasn’t the only reason behind these spectacular performances. A major catalyst for the airlines was the investment of long-time airline bear Warren Buffett.

Air travel is a discretionary spend, so it makes sense to compare airline industry performance to the consumer discretionary sector. The consumer discretionary sector, tracked by the Consumer Discretionary Select Sector SPDR ETF (XLY), rose 2.3% in the two previous months.

The broader market, tracked by the SPDR S&P 500 ETF (SPY), rose 1.9%. So we can see that airlines have clearly outperformed the consumer discretionary sector and the broader market in October and November.

Series overview

In this series, we’ll explore some of the key highlights of major airlines’ 3Q16 earnings. The airlines we’ll focus on in this series are the three major legacy players—American Airlines (AAL), United Continental (UAL), and Delta Air Lines (DAL).

We’ll also look at niche legacy player Alaska Air (ALK) and regional players Southwest Airlines (LUV), JetBlue Airways (JBLU), and Spirit Airlines (SAVE).

Be sure to read our detailed 3Q16 earnings analyses for Delta Air Lines, United Continental, American Airlines, Alaska Air Group, JetBlue, Southwest Airlines, and Spirit Airlines.

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