The airline business is absolutely cutthroat. The players fly hundreds of thousands of passengers every year (more for the legacy carriers), have enormous capital expenditures and assets, and run at a generally very high level of business risk. The best ones make no more than about $5  in profit on any given passenger.

Two of the better companies in the industry are JetBlue (NYSE: JBLU) and Alaska Air (NYSE: ALK). As investments, both offer compelling yet different opportunities to investors who believe Warren Buffett may not have been wholly correct when he said investing in airlines was a great way to ignite a pile of cash. 

Two tales

When you're looking at airlines as investments, keep in mind the varying definitions of the word "airline." Comparing one of the Big Five legacy airlines to a regional support airline, regardless of the similarities, is a flawed analysis on multiple fronts—including valuation metrics.

But JetBlue and Alaska Air both operate a hub-and-spoke business, typical of the legacy carriers. They offer membership rewards and travel across the country. For the purposes of this article, the two can be considered peers.

However, that is largely where the similarities end -- at least in their investment theses. An investment in JetBlue today rides on two possible outcomes, while Alaska Air is more of a one-way ticket.

We'll focus on JetBlue here, and cover Alaska Air in depth in the next part of this story.

More consolidation?

Since the American Airlines-US Air merger hit the skids amid federal regulatory pushback, one consistent sub-story has centered on JetBlue and its own possibility of a takeover. Some  analysts believe that either American or US Air could set their sights on JetBlue if they are unable to convince lawmakers that their $12 billion merger would not reduce competition and hike fares for travelers.

JetBlue is a much smaller airline, though it boasts a valuable home base in New York. American Airlines' network would certainly be propped up by JetBlue's coverage and strategic positions at JFK, and US Air could use a similar scale-up.

JetBlue's recent stock performance further suggests the prospect of a takeover. Though it's up more than 30% in the past 12 months, the company's year-to-date performance has been volatile. Shares have gone as high as $7.20 and dipped down to $5.75. In six months, the stock is nearly  flat. The stock's price-to-book ratio (a crucial figure in valuing asset-heavy businesses) is very low, at 0. 95. Alaska Air, for comparison, sits at 2.8 times book value , and Southwest is at 1.47 times book value . That makes JetBlue's price-to-book far lower than both the legacy carriers' and the low-cost airlines' ratios.

Any acquisition, from American or US Air, would imply a premium for shareholders.

On the other hand, the company doesn't necessarily need a buyer. JetBlue has been diligently and effectively strengthening its balance sheet over recent years, as part of a major cost control effort by CFO Mark Powers. Though it would be nice to bolster its presence and compete more head-on with the legacy carriers, the company has been quick to say that size doesn't necessarily mean greater profitability.

In Part II, we'll take a look at Alaska Air and make the call: Which airline is a better investment today?