NEW YORK (TheStreet) -- Investing in big-name airlines is still a good bet, despite the good run they've had over the past four years, Janus Capital airline analyst Kris Kelley said on CNBC's "Power Lunch" on Tuesday afternoon.
His comments come as billionaire investor Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B) bought a stake in four major airlines, including American Airlines (AAL), Delta Air Lines (DAL), United Continental (UAL), and Southwest Air (LUV), according to an SEC filing Monday. Previously, Buffett called the airline sector a "death trap" for investors at a company meeting in 2013 after losing money on a U.S. Airways stake in 1989.
"We're certainly not ones to argue with Mr. Buffett. We find it fascinating that after three decades, he's finally interested again in the space," Kelley noted.
"Don't you find it odd?" CNBC's Brian Sullivan asked.
"I find the timing interesting. We've been invested in this space since 2008," Kelley answered. While the airline stocks have been performing well recently, people like Buffett have been waiting for "confirmation" that the industry is not the same "old airline industry" that it was previously. "Clearly, he's seen that."
The sector has value right now because of the consolidation that has taken place in it, Kelley noted. "You now have the top four airlines with close to 90% market share domestically. From a valuation perspective, most of these stocks are still single digit P/E multiples, they're still well below 10x earnings, generate decent amounts of free cash flow at these levels, they've reduced leverage and pricing is starting to turn the corner."