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The 8 Best Airline Stocks To Buy Right Now!

Sarah Foley - December 16, 2020

best airline stocks

Air travel is a massive global industry, and it’s one that’s full of investment potential. Airlines are set to bounce back in a huge way as travel restrictions lift around the world. In this article, we’ll talk about some of the best airline stocks to buy right now.

The airline industry struggled this year as a result of COVID-19 restrictions. With flights dramatically limited, airlines were unsure of how to price their flights to handle huge fluctuations in demand. However, recent vaccine approval in the US, UK, Canada, and many other countries has given airline stocks a boost.

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Best Airline Stocks To Buy

Southwest plane taking off

Southwest Airlines (NYSE: LUV)

Southwest Airlines was founded in Dallas in 1967, and was one of the first low cost airlines in the world. They started off flying just within Texas, but now fly to over 100 destinations. While they are known for domestic service, they also fly to destinations in Mexico, Central America, and the Caribbean.

Southwest sets themselves apart from other airlines with their friendly customer service and transparent pricing model. Each passenger gets two checked bags for free, and they also don’t impose fees for travelers that need to change their flights.

One of the things that makes Southwest Airlines such a good buy is that they have a great financial track record. They’ve managed to keep their expenses low and have historically been much more profitable than their competitors.

While they have suffered losses as a result of COVID-19, they haven’t been as severe as many of their competitors. This is largely because they’ve focused on flights within the United States, so they haven’t been as heavily affected by international travel restrictions.

This company’s financial successes are due to a very savvy business model that isn’t changing anytime soon. For example, Southwest does not use the traditional hub and spoke model, which can be very pricey. Instead, they have direct flights from several key focus cities. They also stick to one Boeing aircraft model.

Southwest expanded into four new airports in 2020, and has plans to add six more in 2021. Most notably, they will begin flying out of Chicago’s O’Hare International Airport, which has long been dominated by United Airlines.

Southwest shares have been on an upward trajectory since the market crashed in the spring. Investors are hopeful that the airline will eventually hit its pre-pandemic highs of over $65 per share.

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Delta plane in the snow

Delta Air Lines (NYSE: DAL)

Delta Airlines is one of the largest carriers in the United States and in the world. They have a very long history, and began their first passenger service in 1929.

They were one of many airlines to struggle in the early 2000s and through the Great Recession. However, they emerged stronger after acquiring Northwest Airlines in 2008. They have since become one of the most innovative airlines on the market.

Delta shares dropped sharply when the pandemic hit and plateaued for many months afterwards. However, their shares have recently seen an uptick as a result of vaccine hopes.

There are a few reasons why Delta is poised to come out of this crisis stronger than some of their competitors. They have stakes in seven international airlines, and they also have 23 international codeshare agreements. Their huge global market share will be key as passengers start traveling internationally again.

One of Delta’s savviest financial moves was to purchase an oil refinery in 2012. This helped them manage their fuel costs much more effectively than competitors. Delta has also figured out how to compete with low cost carriers in a way that many of their high-end competitors have not. They’ve done this through a focus on great customer service, efficiency, and transparency.

Biggest Airline Stocks

row of American Airlines planes in front of NYC skyline

American Airlines Group Inc. (NASDAQ: AAL)

American Airlines is the largest airline in the world. Investors naturally have their eye on this transportation giant as the industry slowly returns to normal.

In 1930, more than 80 smaller air carriers merged to form American Airlines. Since then, they’ve built a massive international presence in over 50 countries. They currently serve more than 350 destinations and have joint ventures with five international airlines.

Additionally, the company owns US Airways. American and US Airways merged in 2013 as a result of financial struggles that American Airlines had at the time.

The pandemic has been particularly hard on American. They’ve had to shrink their fleet and cut flight services around the world. It’s too early to tell exactly how American is going to recover, especially since they were struggling to post good revenue numbers even before the pandemic.

While American still saw losses in the third quarter of 2020, they were still able to beat market estimates. Market data has shown a slight uptick in American’s share values since the FDA approved the coronavirus vaccine for emergency use.

Investors should be careful with American Airlines, as the company does carry a large amount of debt and has struggled financially for quite some time. However, if you’re looking for a long-term stock pick, this could be one to add to your portfolio. As the largest airline in the world, it’s unlikely that American will ever fully fold.

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United airlines plane

United Airlines Holdings (NASDAQ: UAL)

United Airlines is another one of the largest airlines in the world. They acquired Continental Airlines in 2010 and formed United Airlines Holdings.

This company is a member of the global Star Alliance and currently flies to all six continents. They have a substantial network within Asia, which is key for international business travel.

United operates a huge network of routes within the United States, centering around eight domestic hubs. They serve many small airports through their United Express flights.

Since United flies internationally, the negative effects of the COVID-19 pandemic have been difficult. However, their CEO recently indicated that he believes they will return to operating in the green before many of their competitors do.

United stock value is on a slow but steady uptick after the industry crash in the spring. However, the company was trading at nearly double their current share price for much of last year. Because of their huge market share, investors will want to keep an eye on this airline as the stock market slowly recovers.

Airline Stocks To Buy Right Now

Alaska Air Group (NYSE: ALK)

Alaska Air Group is based in Seattle, Washington. This company owns Alaska Airlines as well as Horizon Airlines, which is a smaller regional air carrier.

Alaska Airlines flies to more than 100 destinations throughout North America, including airports in Canada, Mexico, and Costa Rica. They have five hubs on the west coast of the US. They also have a strong presence in the Hawaiian market, flying to four airports there.

Although Alaska has seen losses this year just like every other major airline, there’s a few factors that could indicate future success. The first is that they have plenty of liquidity to offset some of the financial challenges of this year and likely avoid bankruptcy.

Another factor that makes Alaska an attractive stock pick is their presence in top leisure travel markets. These include resort destinations in Mexico and Hawaii, as well as popular tourist destinations in the US.

Since many industries have fully adjusted to working from home, it will likely take business travel much longer to bounce back than leisure travel. Alaska’s focus on the vacation market will help them as passengers start taking vacations again.

Alaska also gets great reviews for their customer experience. They have a strong business model that makes them one of the best airline stocks to keep an eye on.

Allegiant Travel Co. (NASDAQ: ALGT)

Allegiant Travel is a stock that many analysts have had their eye on this year. After the stock market crash in March, Allegiant made a huge rally and is now trading at a very impressive high.

This company is a low cost carrier with destinations throughout the US. They offer both scheduled and charter flights, which makes them different than many of the other airlines on this list. Many of their destinations are small regional airports as opposed to large international hubs.

Allegiant has a very efficient business model that is designed to keep costs low without compromising the customer experience. They operate many of their routes seasonally or only a few times per week, depending on demand for each flight.

This airline has done well this year despite a volatile stock market. By flying only in the US, they haven’t lost any revenue from international travel the way some competitors have. Additionally, they focus more on the leisure destinations, which have maintained much of their demand.

Allegiant’s stock price has gone up dramatically this year, but many analysts still feel there’s potential to grow and have been increasing their estimates. With such a savvy business model, Allegiant is a stock to watch as the airline industry comes back to life.

International Airline Stocks

Ryanair plane

Ryanair Holdings (NASDAQ: RYAAY)

Ryanair is an Irish airline provides low cost flight services. Their holdings group also owns Buzz and Malta Air. While the bulk of Ryanair’s flights are in Europe, they also have some routes to the Middle East and northern Africa.

This company has been on an upward trajectory as European countries slowly started reopening their economies. They also saw a significant spike in their share price in the beginning of November. This happened as a result of positive COVID vaccine developments.

Ryanair just purchased 75 new Boeing MAX aircraft to expand their fleet. They are one of the first airlines to repurchase this aircraft after its struggles and grounding over the past several years.

This stock has had incredible year over year returns and huge momentum despite financial losses this year. Their low fares and general low-cost model have made Ryanair very popular among young leisure travelers.

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Best Airline Penny Stocks

Deutsche Lufthansa (OTC: DLAKY)

Lufthansa is a German airline with a large presence in Europe. Their stock is currently very affordable, making it one of the best choices for those who want to invest in airline companies at a low price.

Lufthansa is a member of the global Star Alliance and has a massive fleet of over 700 aircraft. They have hubs in Frankfort and Munich and fly to destinations throughout the world. They also own Brussels Airlines, Austrian Airlines, Swiss Air Lines, and Eurowings.

This stock has struggled to recover after the pandemic in terms of share price. However, data indicates that Lufthansa could be undervalued. This company is a great affordable buy for those wanting to invest in airlines.

Should I Buy Airline Stocks?

With all of the challenges the airline industry is currently facing, you may be wondering – should I buy airline stocks? The answer is a surprising yes.

While the industry has struggled this year, air travel isn’t going away completely. As countries around the world distribute the vaccine, airline passengers will slowly return to their normal travel schedules. Airline stock prices are much lower right now than they normally are. Buying now, while the prices are low, means there’s potential for big returns in the long run.

You’ll want to ensure that the companies you are investing in have a strong business model. Two key metrics to look at are cost per available seat miles and revenue per available seat miles. Available seat miles are the total number of miles the airline flew multiplied by the number of seats they made available to book.

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Airline Stocks: Final Thoughts

The airline industry is currently on its way up after an incredibly tough year. We’re excited to see how these top airline stocks rebound as the vaccine brings the pandemic to an end. Reliable air carriers are a great addition to your long term investment portfolio.

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Sarah Foley is a freelance content writer based in Chicago. She covers finance as well as real estate, technology, pop culture, and more.

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