3 Airline Stocks You Should Keep an Eye on in 2H24

Airline stocks have been flying high, primarily owing to strong passenger revenues. Air travel demand has roared back from the pandemic lows and is particularly strong on the leisure front. Demand for business travel is also bouncing back nicely. Driven by upbeat passenger volumes, stocks in the airline industry have performed well in the first half of 2024.

With passenger traffic anticipated to remain high throughout the year, airline stocks are expected to perform strongly in the latter half of 2024 as well. Passenger volumes are likely to move further northward in the ongoing summer season. Per Airlines for America, U.S. airlines are anticipated to carry 271 million passengers from Jun 1 to Aug 31, 2024.

The projection marks an all-time high. Air travel is expected to soar over the Labor Day holiday period later this year as well. It is also anticipated to be high during winter, thereby keeping airlines in good shape. Moreover, efforts to reward shareholders by the industry players indicate financial strength.

This optimism regarding air travel is not limited to the United States only. In June, the International Air Transport Association, or IATA, increased its current-year global profitability (net) forecast for the industry to $30.5 billion from $25.7 billion estimated in December last year. Net profit in 2023 was $27.4 billion. The top line in 2024 is now anticipated to be $996 billion compared with the previous estimate of $964 billion. The revised revenue forecast, a record high, indicates a 9.7% increase from the 2023 actuals driven by upbeat passenger volumes.

Given this encouraging backdrop, we have highlighted three airline stocks that investors should keep a tab on as they are anticipated to perform well going forward. Additionally, the companies have witnessed favorable earnings estimate revisions for the current year.

Our Choices

SkyWest SKYW carries a Zacks Rank #2 (Buy) at present. The upbeat air travel demand bodes well for this St. George, UT-based regional carrier. SkyWest's fleet modernization efforts are commendable. The Zacks Consensus Estimate for SKYW's 2024 earnings has improved 6.9% over the past 90 days.

SKYW has an expected earnings growth rate of more than 100% for 2024. The company delivered a trailing four-quarter earnings surprise of 128.09%, on average. The Zacks Consensus Estimate for SKYW's 2025 earnings has improved 7.4% over the past 90 days.

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United Airlines is based in Chicago. The gradual increase in air travel demand (particularly for leisure) is aiding UAL. However, high operating costs are hurting the bottom line.

Over the past 60 days, the stock has seen the Zacks Consensus Estimate for 2024 earnings being revised 0.2% upward. The Zacks Consensus Estimate for 2025 earnings has been revised 0.4% upward over the past 60 days. UAL currently carries a Zacks Rank #3 (Hold).

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Alaska Air ALK: The company, based in Seattle, WA, is being aided by the uptick in air travel demand. The carrier's shareholder-friendly attitude also bodes well.

Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has been revised 2% upward. The Zacks Consensus Estimate for 2025 earnings has been revised 5.1% upward over the past 60 days. ALK currently carries a Zacks Rank #3.

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