Tepper's Airline Bets Pay Off

Jun 18 2012 | 1:25pm ET

Appaloosa Management chief David Tepper’s recent airline purchases have taken off.

The distressed investing specialist invested in both US Airways Group (up 135.1% year to date) and Delta Airlines (up 27% YTD) in the first quarter.

Tepper added 7,419,026 US Airways shares in the first quarter at an average of $7.40, according to MSN Money, bringing his total holding of 10,657,243. The stock began rallying in late January, as the company announced it Q4 2011 earnings (a net profit of $21 million) and a possible takeover of the bankrupt American Airlines holding company, AMR.

As for Delta, Tepper bought 6,740,189 shares in Q1 2012 at an average price of $9.80 per share after selling off his stake in Q4 2011. MSN said Tepper took unusual steps to hedge fuel costs in Q2 by buying a refinery, which could save the company up to $300 million annually.

Delta Airlines also began rallying early in 2012, announcing GAAP fourth-quarter 2011 net income of $425 million (compared to $19 million in Q4 2010). Its net income for 2011 was $1.2 billion, excluding special items.

 


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