When Pigs Fly….

That is reportedly what popular stock guru Jim Cramer said about buying airline stocks. Things have changed a lot though, and even though I can prove that Pigs still can’t fly Jim Cramer is recommending that you buy airline stocks for the first time. That says a lot about the health of the industry.

“I am going to do something unprecedented here on Mad Money. I’m going to recommend the stock of an airline, an industry I have outright hated for at least 10 years,” Jim Cramer said on Tuesday’s broadcast.
That is a drastic change of course.

“It’s true. In the past, I would have said to sell without a second thought,” Cramer admitted.

“Today, I’m willing to come out right here, right now, and say that I’m bullish on the entire airline sector for the first time in well over a decade, and that US Airways is the best stock of the bunch.”

Why the change of direction on the airline industry?

Cramer said until now the industry was just no way for carriers to compete without lowering ticket prices.

But over the past 6 years there have been a lot of airline consolidations. Following are the biggest:

– Delta-Northwest deal in 2008
– United-Continental merger in 2010
– Southwest’s acquisition of Airtran in 2011
– AMR’s planned merger with US Airways in 2013

If and when that last deal is approved Cramer said the airline industry will have become an oligopoly.

“Once the AMR-U.S. Airways deal goes through, we’ll be in a new world order, where the top four domestic airlines handle over 80% of domestic traffic. These mergers have allowed the airlines to cut costs and take out excess capacity. In short, running a major airline is now a viable business proposition.”

“Again, I’m bullish on the entire airline sector for the first time in many years.”