"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."
Holy Cow! What's changed?
A lot. Cramer said until now the industry was just chock-a-block with competition. And there was no way for carriers to compete without lowering ticket prices.
But over the past 6 years there's been a spate of 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."
That also means because of these mergers, the ultra-competitive landscape that made the airline industry uninvestable is now gone, Cramer said. "Again, I'm bullish on the entire airline sector for the first time in many years."
Now, why is US Airways Cramer's favorite pick?
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More from Mad Money with Jim Cramer:
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Again, the catalyst is the merger with AMR.
"Just yesterday Doug Parker, the CEO of US Airways, told a conference that he expects no issues to come up in the Justice Department's review, and the deal is expected to close in the third quarter."
Once the merger is completed, the combined company is expected to become the largest airline in the world, with a fleet of 1500 aircraft.
But the airline won't just be big – it will be powerful.