Key Takeaways
Recessions typically lead to depressed operating income for airlines, with commensurate enterprise value reductions.
Weaker firms should logically see the largest enterprise value mark downs, as their operating income is hit hardest.
The strongest U.S. airline, LUV, has seen its enterprise value marked down the most since the start of the Covid-19 pandemic.
Meanwhile, the two weakest airlines, AAL and SAVE, are on pace to see their enterprise values slightly increase in 2020.
We recommend owning LUV, as its exaggerated enterprise value decline this year is unwarranted and should recover. AAL and SAVE will likely see enterprise values move down through share price decline.
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