- These airline stocks are worth a look at as travel returns in a very big way.
- Southwest Airlines (LUV): It is one of the few airline companies to have never landed in bankruptcy court, which shows the strength of its operations.
- United Airlines Holdings (UAL): United Airlines expects to turn profitable again in the second quarter. They see demand for business and leisure travel rising which is great news for investors.
- Delta Air Lines (DAL): Delta made $8.2 billion in revenue during the quarter ended March, which was 79% restored versus 2019.
Many airlines were forced to shut down their services when the pandemic hit, but they are returning. Therefore, the time is ripe to invest in airline stocks.
During the last two years, these stocks have suffered immeasurable damage. Their downward spiral prompted one of the greatest stock pickers ever, Warren Buffet, to completely bail on the sector. Billionaire Warren Buffett’s company, Berkshire Hathaway (NYSE:BRK-A), sold all its holdings in the biggest four American airlines in 2020.
Buying airline stocks may be a lucrative decision, but other options are available; these include investing in different industries such as technology.
However, airline stocks are a safer investment in usual circumstances. Plus, you have the busy travel season coming up. We already saw a huge increase in the number of travelers during spring break, so it’s safe to assume airlines are looking at great earnings in the summer.
|UAL||United Airlines Holdings||$41.50|
|DAL||Delta Air Lines||$36.67|
Airline Stocks: Southwest Airlines (LUV)
Southwest Airlines (NYSE:LUV) has a history of staying profitable even when rival airlines haven’t had the same luck. That’s because of its streamlined operations. It’s easier to stay afloat with fewer employees and flights so you can focus on your core business.
Southwest is one of the few airline companies never to have landed in bankruptcy court, which shows the strength of its operations.
It doesn’t mean the company has not had tough times. The company was reported to have lost a record $3.5 billion in 2020, including special items like losses as a result of the Covid-19 pandemic.
Despite the pandemic, the company was able to survive, and it just posted $4.7 billion in revenues in Q1 – 9% less than pre-pandemic figures. More importantly, the company is optimistic about demand returning this year.
Southwest has been financially hedging against future fuel spikes. This will save them an estimated $1 billion this year. Plus, people are more conscious than ever about ticket prices now that inflation is increasing rapidly. Since they offer low prices and good deals, budget airlines are becoming very sought-after.
United Airlines Holdings (UAL)
United Airlines Holdings (NASDAQ:UAL) is the third-largest airline globally. It operates across many transoceanic routes and has significant stakes within international routes.
As a result, it offers resources and opportunities for all organizations, whether setting up flight connections between Singapore and Europe or catering to Silicon Valley enterprises.
However, due to its reliance on certain networks, it came under considerable fire. United Airlines’ core market is highly cyclical so it results are up and down as well. It can be difficult to make progress in a constantly changing sector, so they know how important it is to have diversified routes.
Nevertheless, there are several reasons why the company is one of the best airline stocks at the moment. It was announced that United Airlines’ load factor in the first quarter was below analyst predictions, although it’s the highest level for two years.
Airlines need to measure the occupancy rate of their seats, which they refer to as the load factor. This percentage measures how much space is filled by paying customers.
Although the company missed revenue estimates, the figure was still up 134.9% year over year. Airlines are returning to profitability after having difficulty for a long time.
They also expect to see strong figures for revenue as well in the second quarter. UAL has a high forecast for its second-quarter revenue, with investments in a diverse range of areas that are expected to provide significant growth. The airline forecasts to turn profitable again in the second quarter, another reason to purchase UAL stock.
Airline Stocks: Delta Air Lines (DAL)
Delta Air Lines (NYSE:DAL) keeps up with its competition by constantly looking for new methods to increase efficiency. Whether it is its website, mobile app, or airplanes, Delta uses technology well.
Delta Air Lines has been a key player in the industry, driving innovation and consolidation. The airline has big plans for the future.
As it has a small fleet without much buying power, Delta was at risk of commercial losses to foreign competitors who had access to cheaper energy supplies. To keep up, the company decided to buy an oil refinery near Philadelphia from ConocoPhillips (NYSE:COP). The legacy carrier says the purchase will help offset risks in the form of higher jet fuel prices.
One of the best things about Delta is that it’s making remarkable progress and should be among the first international carriers to recover fully from Covid-19. It has emerged from the pandemic with a strong balance sheet and plenty of cash.
Although the company reported a loss in the first quarter, it expects to get back on track in the current one and finally turn a profit again.
Delta has been expanding during the peak season to accommodate for higher demand. They plan on flying 84% next quarter, which should avoid flight issues and increase customer satisfaction. This is a huge win for Delta.
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