Fool Fight: American vs. United

Welcome to another Fool Fight. Grab your ringside seat, please.

Our last bout, which featured Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT), resulted in a surprising knockout of Big Goo, thanks to several passionate Motley Fool CAPS players. Today, we turn our attention to the unfriendly skies in a dogfight for air superiority.

Tale of the tape
Let's meet our combatants. In the gray corner, it's American Airlines parent AMR (NYSE:AMR). The carrier's stock has reached for the heavens, having doubled this year. Meanwhile, Chilean partner LAN Airlines looks positively cheap. And a potential merger deal with another partner, British Airways, could be the ticket to sustained profitability. But there are trouble spots, too. American is a leader in losing luggage, for example.

Meanwhile, in the white corner, it's United Airlines parent UAL (NASDAQ:UAUA). United hasn't been as kind to investors as American, but the underlying business has seen major improvements since emerging from bankruptcy. So much so that rumors of a deal to buy Continental persist to this day.

Get ready to ruuuuummmmmmble!
Who will take the title? Ding! There's the bell! First out of the corner is United, with this jab from our Foolish art director, Martin, who goes by the moniker TMFCreative:

United is on the rebound; get in while they are young again. Still leading the industry with the best mileage rewards program and trying to maintain high quality at a lower cost. Out of bankruptcy and on the rise.

American counters with a terrific one-two combination from swellsrf that opens a cut over United's porthole:

Since 9/11 the airline sector has undergone a turbulent period, but not without learning a great deal. With dropping fuel costs, those airlines that did not hedge costs will see an enormous increase in revenue. Additionally, AMR just introduced nonstop flights from Chicago to China, and it also has a very strong bonus rewards program. With the holiday season approaching, stabilizing fuel prices, and terror threats minimal at this point, look for airlines to outperform for a period.

Wow! What a flurry! United looks hurt. But as American moves in for the kill, CAPS player mbornitz12 delivers a wicked upper cut that crushes the carrier's fuselage:

Approximately 8% of all U.S. airline passengers fly through DFW airport on American Airlines. This is an airport in which AMR can charge extremely high rates due to their monopoly in the [Dallas-Fort Worth] metroplex, which encompasses the 19th and eighth largest U.S. cities. The repeal of the Wright amendment, which will open up Dallas Love Field to long-haul flights, will have a significant impact on the prices [American] can charge at DFW and remain competitive, which will have an overall effect on [its] business model and earnings.

Dazed, American retreats to the ropes, collecting itself for one last rally before the bell, courtesy of vmega1:

This negative-P/E, badly beaten stock might be climbing back. Lower oil prices portend an upswing. ... And [its] ability to raise prices in certain markets will also help. That being said, this is a highly volatile stock.

Let's go to the scorecard
And there's the bell! American survives the late-round onslaught, but not without suffering more than a few bumps and bruises. Accordingly, it takes little time for the judges to confer. They award the bout to United, which holds a decisive edge in bullish sentiment:

Get in the ring!
Will American rebound to take the title? Or will U.S. Airways (NYSE:LCC) gobble upDelta and pummel them both? Get in the game now, and tell us what you think. Or, if you'd rather, choose one of the more than 1,500 stocks that have yet to earn a star rating in CAPS, including biopharmaceutical Biomimetic Therapeutics and broker Credit Suisse. Click here to rate either of them now. It's entirely free. Your Fool cap is waiting.

Microsoft is a Motley Fool Inside Value selection. Ask us for an all-access pass to the service and you'll be privy to chief advisor Philip Durell's best picks, which collectively are beating the market by more than 6% as of this writing. You'll also receive instructive lessons on valuation and company analysis. Give Inside Value a try; it's free for 30 days.

Fool contributor Tim Beyers has 31 picks in his CAPS portfolio, including UAL, which he believes will beat the market. Think he's wrong? Get in the game and add your own rating.

Tim didn't own shares of any of the companies mentioned in this story at the time of publication. Get the skinny on all of Tim's stock holdings by checking his Fool profile. The Motley Fool's disclosure policy is always in fighting shape.