Airline stocks can be lucrative investments during thriving economies when more people take vacations and businesses expand. These can also deliver strong returns when oil costs plummet.
But these often volatile stocks can lose altitude in economic downturns. Today, the global airline industry continues to struggle through the turbulence of the COVID-19 pandemic.
Airline stocks are the stocks of companies that provide air transportation for passengers and cargo using a variety of aircraft including airplanes and helicopters. On the passenger side, a few large corporations dominate the global market. But you can also find smaller, domestic companies that provide discount flights and operate under lower costs.
How to invest in the airline sector
There are several ways your airline stock investing can take flight. You can purchase shares of individual airline stocks or buy shares in an ETF which invests in a basket of stocks.
Here’s how to start:
Choose a stock trading platform. You have plenty to choose from, so be sure to compare your options to find the one that works best for you.
Open your account. Be ready with your ID, Social Security number and bank account information.
Fund your account. You’ll need to transfer money to your brokerage account before you can start investing. Some platforms let you start with as little as $1.
Search for stocks. Look up stocks by ticker symbol or use a stock screener to filter the types you’re interested in.
Place an order. Once you’ve found an investment you want, specify how much of it you wish to purchase and submit your order.
Monitor your investments. Track the performance of your portfolio by logging on to your account.
We evaluate stock trading platforms against a range of metrics that include fees, ease of use, available securities and advanced tools to meet specific investor needs. We encourage you to compare stock platforms to find one that's best for your particular budget and goals.
Our pick for beginners. We chose Robinhood for this category because it offers commission-free trading and is easy to use. You can search for stocks by company name, and the mobile app is clean and intuitive to use.
Our pick for building a portfolio. We chose SoFi for this category because it offers both commission-free stocks and a free robo-advisor. That means you can open an active investing account to pick and choose companies you want to invest in, and open a robo-advisor account to help you build a portfolio and manage how much risk you take on.
Our pick for mobile users. We chose Moomoo for this category because its app is easy to use for beginners but offers advanced data and charting for more experienced traders. You can search for companies by name and click Trade to buy stocks, or you can scroll down to see Level 2 market data, price charts and more information.
Airline stocks
If you’re interested in hopping aboard airline stocks, here are some examples to consider before taking flight.
Select a company to learn more about what they do and how their stock performs, including market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield. While this list includes a selection of the most well-known and popular stocks, it doesn't include every stock available.
Company summary
JetBlue Airways Corporation, a passenger carrier company, provides air transportation services. As of December 31, 2019, the company operated a fleet of 63 Airbus A321 aircraft, 6 Airbus A321 neo aircraft, 130 Airbus A320 aircraft, and 60 Embraer E190 aircraft. It also served 99 destinations in the 30 states in the United States, the District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, and 21 countries in the Caribbean and Latin America. JetBlue Airways Corporation has a strategic partnership with American Airlines Group Inc. to create connectivity for travelers in the Northeast. The company was founded in 1998 and is based in Long Island City, New York.
Southwest Airlines Co. operates a passenger airline that provides scheduled air transportation services in the United States and near-international markets. As of December 31, 2019, the company operated a total of 747 Boeing 737 aircraft; and served 101 destinations in 40 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as 10 near-international countries, including Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos. It also offers inflight entertainment and connectivity service on Wi-Fi enabled aircraft; and sells points and related services to business partners participating in the Rapid Rewards loyalty program, such as car rental agencies, hotels, and restaurants. In addition, the company provides a suite of digital platforms to support customers' needs across the travel journey, including Southwest.com, mobile.southwest.com, an iOS app, an iPadOS app, and an android app; and SWABIZ, an online booking tool. Further, it offers ancillary services, such as Southwest's EarlyBird Check-In, upgraded boarding, and transportation of pets and unaccompanied minors. Southwest Airlines Co. was founded in 1967 and is headquartered in Dallas, Texas.
Alaska Air Group, Inc., through its subsidiaries, provides passenger and cargo air transportation services. The company operates through three segments: Mainline, Regional, and Horizon. It has a network of approximately 1,300 daily flights to 115 destinations across the United States, Mexico, Canada, and Costa Rica. The company was founded in 1932 and is based in Seattle, Washington.
Delta Air Lines, Inc. provides scheduled air transportation for passengers and cargo in the United States and internationally. The company operates through two segments, Airline and Refinery. Its domestic network centered on core hubs in Atlanta, Minneapolis-St. Paul, Detroit, and Salt Lake City, as well as coastal hub positions in Boston, Los Angeles, New York-LaGuardia, New York-JFK, and Seattle; and international network centered on hubs and market presence in Amsterdam, London-Heathrow, Mexico City, Paris-Charles de Gaulle, and Seoul-Incheon. The company sells its tickets through various distribution channels, including delta.com and the Fly Delta app, telephone reservations, online travel agencies, traditional brick and mortar, and other agencies. It also provides aircraft maintenance, repair, and overhaul services; and vacation packages to third-party consumers, as well as aircraft charters, and management and programs. The company operates through a fleet of approximately 1,000 aircraft. Delta Air Lines, Inc. was founded in 1924 and is based in Atlanta, Georgia.
If you’re interested in diversifying your portfolio with airline stocks, consider an exchange-traded fund (ETF). These are baskets of stocks that come from various companies, sectors and geographies. Many offer exposure to airline stocks, but only one is primarily made up of airline stocks and other companies associated with aviation including aircraft manufacturers, airline operators and airports.
Why invest in airline stocks?
During times of economic prosperity, airline stocks can offer strong returns. People have more disposable income to travel and take vacations. Business operations can also extend to new areas and even new countries. All this can involve airline travel.
In fact, the decade prior to 2020 saw airline stocks flying high. Before the outbreak of COVID-19, the projected growth of revenue ton-miles (RTM) for international flights led by US commercial air carriers was about 4% per year from 2020 to 2040.
But lockdowns and travel restrictions following the COVID-19 outbreak all but grounded the rise of airline industry profits and passenger capacity.
Risks of investing in airline stocks
Investing in airline stocks today can be risky business, especially for day traders, as the industry continues weathering the storm of COVID-19. The International Air Transport Association (IATA) expects the airline industry to lose more than $250 billion by 2020’s end. And it doesn’t expect airlines to see pre-pandemic passenger levels until 2023. The association notes that even in 2025, passenger traffic will stand 10% below what it had envisioned for that year before the pandemic.
At the height of the coronavirus crisis in April, passenger volume had dropped by 96%, a low not seen since the 1950s. For the week beginning November 30, 2020, the global industry’s number of scheduled flights was down by 45.8% compared to the week of December 2, 2019.
For active investors, the state of the airline industry may look gloomy. But long-term investors may be able to buy these stocks at discount prices and see profits when the industry recovers.
The airline industry has flown out of harm’s way before, but it took time. According to A4A, it took America’s airlines three years to recover from 9/11 and more than seven years to recover from the global financial crisis of 2008.
But as news of a coronavirus vaccine develops, passengers may feel safer to return to the skies. The IATA noted the airline industry has made it through the hardest part of the pandemic and is on its way to recovery. with air transport revenue expected to reach $476 billion in fiscal year 2021 from $340 billion in the current year.
Compare trading platforms
To invest, you’ll need a brokerage account. Explore your options below.
Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.
Bottom line
Airline stocks can soar during strong economies and when oil prices drop. Prior to 2020, the global airline industry was seeing success. But the COVID-19 pandemic, which has rocked the global economy, delivered a particularly damaging blow to the airline sector.
Still, the industry may have weathered the harshest storms as it makes its way toward recovery. This can take years, however. So carefully analyze airline stocks and make sure they can align with your investment goals and risk tolerance. And don’t forget to compare brokerage platforms.
Frequently asked questions
Nobody knows when the airline industry may recover, if at all. But industry groups suspect cruise lines to start picking up in 2021 and seeing some major progress by 2025.
Yes, you can invest in baskets of airline stocks. A mutual fund example would be the Fidelity Select Air Transportation Portfolio.
In 2019, American Airlines carried the most passengers in North America with more than 215 million passengers.
Javier Simon is a freelance investing writer at Finder. He is a certified educator in personal finance (CEPF) with a bachelor's degree in multimedia journalism from SUNY Plattsburgh. He's been featured on NerdWallet, Bankrate, SmartAsset and other major finance websites. He loves writing content that helps people understand complex financial concepts, so they can make better financial decisions. When he's not writing and researching investing concepts, he likes going to rock concerts and the movies.
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