Airline stocks have a long history of boom-and-bust cycles, but today’s industry looks very different than it did a decade ago. Consolidation has left a small group of dominant carriers with better pricing power, stronger balance sheets, and more disciplined capacity management.
Travel demand has rebounded sharply since the pandemic, helping the strongest airlines return to profitability. While rising fuel costs and labor shortages remain real risks, some carriers are far better positioned than others.
For investors who understand the volatility, here are the best airline stocks to consider and how to invest in the sector.
Top airline stocks to consider
Airlines fall into three main categories
Before choosing a stock, it helps to understand how airlines differ:
- Full-service airlines operate global networks with multiple cabin classes and significant international exposure.
- Discount airlines focus on low fares, lean operations, and optional add-on fees.
- Regional airlines operate smaller jets, often under the brand of larger carriers.
Each model carries different risks, margins, and growth potential, which is why not all airline stocks perform the same.
Delta Air Lines
NYSE: DAL
Key Data Points
This airline is the driving force behind much of the recent innovation in the industry. Atlanta-based Delta Air Lines (DAL -0.47%) kicked off a round of consolidations that helped stabilize the business when it acquired Northwest Airlines in 2008, and it has revamped pricing to better compete with discounters. Delta even bought an oil refinery to help ensure its access to jet fuel supplies.
More recently, Delta was out in front of the pack when it came to forging a new labor deal with its all-important pilots group. Where Delta goes, its rivals follow.
Post-pandemic Delta has a stable balance sheet and relatively strong labor relations, making it a good choice to be among the first international carriers to fully recover.
United Airlines Holdings
NASDAQ: UAL
Key Data Points
United Airlines (UAL +0.84%) has large operations catering to Silicon Valley and the U.S. energy sector, as well as a massive network throughout Asia. The highly cyclical nature of those markets means that United's results can ebb and flow with tech or energy.
Chicago-based United historically was the envy of the industry due to its large presence in key business markets and its ability to offer unrivaled connections to corporate travelers. Its advantage waned during the pandemic, but its network is still a key advantage for United.
Importantly for investors, this long-time underperformer now has a stable and progressive management team that has done a good job modernizing its long-sleepy operation.
Southwest Airlines
NYSE: LUV
Key Data Points
Southwest Airlines (LUV -1.16%) was the original discounter, but it is now one of the titans of the industry and no longer a maverick start-up. The Dallas-based airline remains the only major carrier never to land in bankruptcy court, and its simplified operations have a track record of remaining profitable even when rivals struggle.
Southwest's pristine reputation has taken a few hits in recent years. The airline had a high-profile schedule meltdown during the 2022 holiday season, and issues with its aging IT infrastructure led to another systemwide grounding of planes in 2023. The company was the target of activist pressure in 2024, which led Southwest to modernize its systems, begin assigning seats, and add fees for checked bags.
But even if this is not the Southwest of old, the airline is, by and large, a reliable operator that remains a cost leader. It also has the industry's best balance sheet, making it an investor favorite for its ability to survive.
Alaska Air Group
NYSE: ALK
Key Data Points
Alaska Air Group (ALK +1.10%), as its name suggests, has largely been focused on the U.S. Pacific Northwest for much of its history. But thanks to its 2016 purchase of Virgin America and 2023 acquisition of Hawaiian Airlines, the company is now a major player down the West Coast into southern California and has a transcontinental business, as well.
Alaska has historically partnered with its bigger rivals, giving its customers access to the entire globe and its partners more service to small Pacific Northwest markets. These days, Alaska is tied most closely to American Airlines Group (AAL -0.81%).
Through the years, Alaska has developed a reputation as a solid operator that has outperformed its larger rivals. The airline experienced some hiccups when integrating Virgin America, but has regained altitude and once again ranks as one of the most intriguing investments in the sector.
Frontier Group Holdings
What drives airline stock performance
Airline stocks tend to move together, but long-term performance depends on a few key factors:
- Travel demand: Leisure travel has become more consistent year-round, while business travel remains more cyclical.
- Fuel costs: Jet fuel is often an airline’s largest variable expense and can quickly pressure profits when oil prices rise.
- Labor availability: Pilot shortages and labor contracts can affect costs, schedules, and reliability.
- Capacity discipline: Airlines that manage routes and seat supply carefully tend to outperform those that chase growth at any cost.
The strongest airlines are those that can stay profitable even when one or more of these factors turns against them.
Understanding the airline sector
Investors should understand several airline-specific terms before buying any stock. Here's what you need to know:
- RASM: Short for revenue per available seat-mile, RASM is a measure of airline profitability. RASM is important because all flights have different fare and cost structures depending on many variables, including flight distance and aircraft type. Simply looking at total revenue or expenses won't give you the full picture of profitability or margins.
- CASM: Short for costs per available seat-mile, CASM is an airline’s total costs divided by the number of available seats, then multiplied by miles flown. It measures expenses the way RASM measures sales.
- Load factor measures how well an airline is filling its seats. If 60 of 100 seats on a flight are full, the flight's load factor is 60%.
Airlines provide this information on earnings releases and conference calls.
How to invest in airline stocks
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Are airline stocks right for you?
Airline stocks can be rewarding, but remember that the sector is cyclical, and profits can swing quickly with fuel prices, labor costs, and the broader economy.
If you can tolerate volatility and believe travel demand will grow over time, a well-run airline can offer leveraged exposure to economic expansion. If you prefer steadier returns, consider limiting airlines to a small portion of your portfolio or using an airline ETF for diversified exposure.
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FAQ
Investing in airline stocks: FAQ
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