The airline stocks industry has demonstrated remarkable resilience, bouncing back from the unprecedented challenges posed by the COVID-19 pandemic. After enduring a historic loss of $140 billion, the sector returned to profitability in 2023 and is poised for further growth in 2024. The International Air Transport Association (IATA) projects the industry’s net profit to rise to $25.7 billion in 2024, buoyed by a steady increase in demand for air travel. With the number of passengers expected to double by 2040, the industry’s annual growth rate is forecasted to be 3.4%.
As demand for air travel is expected to double by 2040, with an annual growth rate of 3.4%, this positive trend presents promising opportunities for investors. Additionally, the strategic adjustments made by airlines, such as fleet optimization and operational efficiencies, have positioned them well to capitalize on the rising demand. Investors looking to benefit from this industry’s resurgence should consider the top airline stocks picks, which combine strong performance metrics with favorable market positioning.
In this post, we explore some of the best airline stocks poised for success in 2024, offering a blend of stability, growth prospects, and attractive valuations.
Best Airline Stocks in 2024
Here are the best airline stocks to consider for 2024.
1. Delta Air Lines (NYSE: DAL)
Delta Air Lines, the largest domestic airline carrier, stands out with its attractive forward price-to-earnings (P/E) ratio of just 7.2. The company has fully recovered from pandemic-related setbacks, impressing investors with its robust 2024 outlook. Analysts unanimously rank DAL stock as a “buy” or “strong buy.” One key advantage for Delta is its avoidance of the Boeing 737-9 MAX, which has faced several in-air crises. This strategic decision helps Delta avoid potential disruptions.
Despite a volatile performance over the last 12 months, DAL stock has significantly rebounded from its 52-week low of around $30 set in late October 2023. With its strong market position and favorable valuation, Delta Air Lines is a solid pick for airline stock investors looking for stability and growth in the airline sector.
2. Ryanair Holdings (NASDAQ: RYAAY)
Ireland-based Ryanair, although trading at the higher end of the valuation range, justifies its premium with stellar performance and strong growth prospects. The company has significantly raised its earnings guidance, with a high-end target more than 50% higher than the prior fiscal year. Ryanair’s increased outlook, coupled with continued passenger growth, positions it well for 2024.
RYAAY stock has faced minimal disruption from recent geopolitical conflicts, maintaining a strong performance trajectory. Investors can expect further gains as Ryanair capitalizes on robust travel demand, making it an attractive airline stock option in the airline sector.
3. United Airlines Holdings (NASDAQ: UAL)
United Airlines offers an appealing investment opportunity with its exceptionally low forward P/E ratio of 4.4, a deep discount compared to the broader market and its peers. Despite short-term challenges, including winter storms and reliance on the Boeing 737-9 MAX, UAL stock remains a strong contender due to its attractive valuation.
The airline’s performance has been pressured by fleet-related issues, but much of this negativity is already priced in. Bargain-hunting investors may find United Airlines an enticing option, given its potential for recovery and growth in the coming year.
4. American Airlines Group (NASDAQ: AAL)
American Airlines faced a challenging 2023, with a significant stock decline following a disappointing earnings report and a costly $10 billion agreement with its pilots. However, this agreement provides long-term stability and avoids disruptions from potential strikes, offering certainty for investors.
With much of the past year’s negativity now priced in, AAL stock presents an attractive investment opportunity. The company’s modest expectations and four-year labor deal should instill confidence among investors, making American Airlines a noteworthy airline stock to consider for 2024.
5. SkyWest Inc. (NASDAQ: SKYW)
SkyWest operates a unique business model, leasing regional jet aircraft and related services to major airlines like United, Delta, American, and Alaska Airlines. This indirect play on airline operations offers investors exposure to positive industry trends without the direct risks associated with individual carriers.
In 2022, SkyWest carried over 40 million passengers for its partners, and the company forecasts over 14% sales growth in 2024. More importantly, its earnings per share (EPS) are expected to surge by more than 700% as the industry regains momentum. With its strong growth outlook and strategic partnerships, SkyWest is a compelling investment in the airline stocks sector.
Industry Outlook and Investment Considerations
The airline industry’s return to profitability and strong growth projections offer a favorable environment for investors. However, it’s essential to consider several factors before investing in airline stocks:
- Economic Conditions: The airline industry is highly cyclical and sensitive to economic downturns that can reduce consumer and business travel spending.
- Fuel Prices: Fluctuations in fuel prices can significantly impact airline profitability, making it crucial to monitor global oil markets.
- Regulatory Environment: Airlines are subject to extensive regulations, and changes in policies can affect operations and costs.
- Geopolitical Risks: Conflicts and geopolitical tensions can disrupt travel patterns and airline operations.
Investors should weigh these considerations against the strong growth prospects and recent performance of the highlighted airline stocks. By carefully selecting well-positioned companies like Delta Air Lines, Ryanair, United Airlines, American Airlines, and SkyWest, investors can capitalize on the industry’s upward trajectory while managing potential risks.
Final Thoughts
In conclusion, the airline stocks present promising investment opportunities for 2024. With demand for air travel expected to grow steadily, these stocks offer a combination of stability, growth potential, and attractive valuations. By staying informed and making strategic choices, investors can navigate the skies of the airline industry with confidence.
Also read: How To Make Money In The Stock Market For Beginners