Delta Thumbs Nose at its Competitors

Updated with additional analyst comment.

ATLANTA (TheStreet) -- No doubt Delta (DAL) is laughing at its competitors, as more signs emerged this week that the carrier is leading the U.S. airline industry in financial performance, labor relations and attitude.

Last month, Delta announced first-quarter results which showed strong metrics at a time when United (UAL) digested merger disruptions and AMR (AAMRQ.PK) operated under bankruptcy court protection.

Delta shares have risen 39% year to date, second among major airlines after US Airways (LCCL), which is up 121% on merger speculation. United is up 25%, while the top three domestic-focused carriers are all showing declines.

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In a report issued Thursday, CRT Capital Group analyst Mike Derchin wrote that Delta is trading at 4.2 times estimated 2012 EBITDAR and that "Delta's franchise is being grossly undervalued by the market." He has a $17 target price. Shares closed Wednesday at $11.39.

Delta has gained pricing advantages that are continuing into May, according to a report issued Wednesday by UBS analyst Kevin Crissey.

"Delta is our top pick based on revenue outperformance and debt reduction," wrote Crissey, who said industry pricing is improving by mid-single digits in May and high single digits in June. "Delta is continuing to outperform in May but Alaska (ALK) and American are showing nice strength themselves," he said.

Additionally, on Tuesday, Delta and its pilots announced a tentative contract agreement. This comes at a time when American is seeking to abrogate its pilot contract in bankruptcy court: Those pilots have already agreed to a tentative deal with US Airways and are backing a merger. United pilots, meanwhile, recently staged demonstrations to protest the slow pace of contract negotiations and to question the safety of agreements that outsource some United flying to regional carriers.

Delta and its pilots reached agreement more than seven months ahead of the amendable date. In a letter to the Delta pilots, Tim O'Malley, chairman of the Delta chapter of the Air Line Pilots Association, wrote that "the negotiating committee and its expanded team have accomplished a great deal of work in the last two months, reaching a comprehensive Section 6 agreement in just over two months, a process that normally takes years."

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No details were released. But aviation consultant Robert Mann said the deal shows that "as with the pre-merger closure to a Delta/Northwest seniority deal and joint contract, Delta continues to value the cooperative relationship" with its pilots.

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