American Airlines Or United Airlines: Which Would You Rather?

Two of the oldest airlines have a corporate rivalry that borders on legendary. United Continental Holdings UAL (United Airlines) and American Airlines AAL are almost always locked in a head-to-head competition for industry supremacy, despite the rise of several other newer airlines.

Most people who are new to stocks think that both companies represent a strong and reliable picks, but with the industry as a whole experiencing hardship the last several years, even the heavyweights can suffer rough times.

So with that in mind, which would you rather add to your portfolio: United Airlines or American Airlines?

See Also: Zynga Or Groupon: Which Would You Rather?

When it comes to revenue generation, American Airlines is the largest domestic airline with United a close second. The latter operates on six continents and in over 360 countries with over 5,300 flights taking off and landing on a daily basis.

Neither Stock Shines

American Airlines has only been trading for a few months, having begun its new market presence in December of 2013. Its stock performance has been largely underwhelming and United’s share price hasn’t been much better, especially when compared to the third place airline, Delta DAL, which has shown strong gains recently and is creeping up on United.

Truth be told, the first quarter of 2014 was not kind to anyone in the airline industry./p>

The polar vortex that plagued much of the United States and other places around the world this winter was brutal for several reasons, not the least of which being the fact that air travel numbers took a significant hit. It took an especially noticeable toll on United.

United's Weak Quarter

American (and the other airlines) saw first quarter profits while United saw a loss of $1.66 per share, which is not peanuts (or pretzels either). That loss is saying something considering the fact that their hubs are in many of the same airports as other airlines that weren’t as adversely affected.

United cancelled upwards of 11,000 flights just during the month of February which resulted in a 0.3% decrease in passenger revenue miles. With a capacity drop of 0.9%, there was a one-half point load factor gain which allowed them to finish out the month at 79.2%. This would ordinarily be good news but in this case the drop in revenue and capacity is especially detrimental--the competition managed to increase capacity.

American Airlines, on the other hand, was still dealing with issues of integration after having retooled its corporate infrastructure late last year. Nevertheless, they were able to add 0.8% to capacity and experienced a 0.5% increase in revenue passenger miles. Also, despite a drop in load factor, American held steady at a respectable 78.4% and passenger revenue rose 2.9% for the first quarter.

So in the end, this may be the ultimate crap shoot when it comes to the better stock pick. While the two titans of industry are still leading the pack, there are others like the aforementioned Delta that are gaining ground quickly.