Airline stocks can be rewarding investments during thriving economies when more people take vacations and businesses expand. These stocks can also deliver strong returns when oil costs plummet. But if the pandemic has taught us anything, it’s that no sector is immune to loss, and the airline industry is no exception.
The market has since rallied, albeit with a little bit of turbulence. And while new variants can present some trouble moving forward, travel trends seem to be improving.
What are airline stocks?
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’ll also find smaller, domestic companies that provide discount flights and operate under lower costs.
Top Airline Stocks
Finder’s investments experts analyze all S&P 500-listed stocks to curate a list of the best performing stocks. The companies are ranked in average order of both their year-to-date and month-over-month performance.
How to invest in the airline sector
There are several ways your airline stock investing can take flight. Purchase shares of individual airline stocks or buy shares in an ETF that invests in a basket of airline stocks. Either way you choose, 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. Look for things like fees and commissions, platform features, education tools and reliability.
Open your account. Be ready with your ID, Social Security number and bank account information. In most cases, you should have your account opened and ready within minutes.
Fund your account. Transfer money to your brokerage account before you start investing. Some platforms let you start with as little as $1.
Search for stocks. Start your search with our top airline stocks, but conduct your own research so you feel comfortable before investing. 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 many shares you wish to purchase and submit your order.
Monitor your investments. Track the performance of your portfolio by logging on to your account.
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What ETFs track the airline sector?
If you’re interested in diversifying your portfolio with airline stocks and don’t have the time or interest to research each individual stock, 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 US Global Jets ETF (JETS) is primarily made up of airline stocks and other companies associated with aviation, including aircraft manufacturers, airline operators and airports.
The following ETFs also provide exposure to airline stocks but focus more heavily on the broader transportation industry:
iShares Transportation Average ETF (IYT)
First Trust Nasdaq Transportation ETF (FTXR)
SPDR S&P Transportation ETF (XTN)
ETFMG Travel Tech ETF (AWAY)
Airline sector pros and cons
Airline stocks can offer strong returns during prosperous times: 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. But airline stocks have unique risks also worth considering.
Pros
The worst looks to be behind us. As vaccine rollouts continue to develop, passengers may feel ready to return to the skies. The International Air Transport Association believes the airline industry has made it through the hardest part of the pandemic and is firmly 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.
They might be at a discount. Active investors may say the airline industry is still too precarious to bet on, but airline stocks appear to be on an upward trajectory for 2021, with many airlines expressing optimism about recent positive trends in travel bookings. Long-term investors may be able to buy these stocks at discount prices and see profits as the industry continues to recover.
Cons
Recovery can continue to be choppy. There’s no definitive timeline for when this sector will recover from the COVID-19 pandemic. The IATA doesn’t expect airlines to see prepandemic 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.
Airline stocks can take longer to recover compared to other stocks. The airline industry has flown out of harm’s way before, but it can be a time-consuming process. 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.
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When the conditions are right, airline stocks have the potential to soar — particularly during strong economies and when oil prices drop. Before 2020, the global airline industry was profitable, but the COVID-19 pandemic delivered a particularly damaging blow to the sector.
While recovery can be slow, things already look promising for the rest of 2021. And these airline stocks are positioned to benefit nicely from continued recovery.
Before you invest, carefully weigh your potential stock’s past performance and future projections. Find the account to help you meet your investment goals when you compare brokerage platforms.
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Matt Miczulski is an investments editor and market analyst at Finder. With over 450 bylines, Matt dissects and reviews brokers and investing platforms to expose perks and pain points, explores investment products and concepts and covers market news, making investing more accessible and helping readers to make informed financial decisions.
Before joining Finder in 2021, Matt covered everything from finance news and banking to debt and travel for FinanceBuzz. His expertise and analysis on investing and other financial topics has been featured on Yahoo Finance, CBS, MSN, Best Company and Consolidated Credit, among others. Matt holds a BA in history from William Paterson University.
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