Why US Airways Is Poised to Pull Back

Market-lagging returns could be written in this 1-Star.

Brian D. Pacampara, CFA
Brian D. Pacampara, CFA
Feb 14, 2013 at 7:33PM
Industrials

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, airline operator US Airways (UNKNOWN:LCC.DL) has received an alarming one-star ranking.

With that in mind, let's take a closer look at US Airways, and see what CAPS investors are saying about the stock right now.

US Airways facts

  

Headquarters (founded)

Tempe, Ariz. (1981)

Market Cap

$2.4 billion

Industry

Airlines

Trailing-12-Month Revenue

$13.8 billion

Management

Chairman/CEO William Parker (since 2005)

CFO Derek Kerr (since 2005)

Return on Capital (average, past 3 years)

9.4%

Cash/Debt

$2.4 billion / $4.8 billion

Competitors

Delta Air Lines (NYSE:DAL)

Southwest Airlines (NYSE:LUV)

United Continental Holdings (NASDAQ:UAL)

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 42% of the 802 members who have rated US Airways believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, Allstar13913, succinctly summed up the bear case for our community:

There is no way a merged American Airlines and US Airways is profitable in the near term. When United and Continental merged in 2010, they spent almost $3B and 2 years later the merger hasn't been [integrated] .

Additionally, US Airways will have to raise their wage scale to American Airlines, which will hurt profitability. While a merger would create a better network and might position US Airways to a better future, I doubt it will make money.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.