While the recent phenomenon of sharply diminished fuel prices may leave consumers happy and their wallets fuller at the gas pump, there have been diverse destructive ramifications on energy companies, the job market and the overall well being of economic affairs. One beneficiary of the year-long plunge in fuel prices are airlines. While some industries are taking a nose dive in these turbulent conditions, airlines are ready for takeoff and attempting to take full advantage of the favorable conditions and increased profitability.
George Soros, well-respected investor, philanthropist and manager of a hedge fund valued at $6.05 billion, has made several changes to his portfolio in the fourth quarter including an increase of his stake in Delta Air Lines, Inc. (NYSE:DAL) and a decrease in his American Airlines Group Inc (NASDAQ:AAL) holdings. Soros’ hedge fund generated a 12.23% return to investors in the fourth quarter. Let’s take a closer look into recent events potentially influencing the investment decisions of Soros:
Delta Air Lines, Inc.
Delta reported strong FY15 performance in a mid-January press release. The airline had an “adjusted pre-tax income of $5.9 billion, a 29% increase over 2014 on a similar basis.” It also reported 2015 as a “record for Delta on all fronts – with industry-leading operational performance, superior customer satisfaction, and a $5.9 billion adjusted pre-tax profit.” Delta’s 2015 performance likely influenced Soros in his choice to increase his holdings in the company.
However, the airline reported unimpressive February performance with a 5.5% decline for the month compared to performance in the previous year. While the short-term outcomes aren’t promising, the decrease in oil prices serves to increase potential for profits for the airline in the eyes of analysts. These conditions may be reflected in upcoming results of Delta.
