Airline stocks are subject to pushbacks. Rising fuel prices, weak domestic pricing and the possibility of eliminating baggage fees as well as extreme security delays are expected to hurt short-term growth in the industry.
Stocks in the airline sector are a long-term investor’s endeavor, and three stocks to consider are:
1. Southwest Airlines (LUV)
Southwest has struggled on the year, with a 1.2% drop in stock price. Top-line growth helped the company achieve a record Q1, with revenue increasing 9% on the quarter. Fuel costs fell 3% and cost controls put in place by the company’s management pushed the company’s revenue to record numbers.
The company announced on Wednesday that it has filed an application to offer non-stop flights from Los Angeles to three beach destinations in Mexico.
2. Hawaiian Airlines (HA)
Hawaiian has outperformed all year, up 13.4% since the start of the year. The company is facing times of uncertainty due to pilot agreements that are expected to be met in the final hours. In May, 99% of pilots voted for a strike if an agreement is not made, which would be devastating for the company.
The company is likely to come to an agreement before a strike, according to aviation experts.
Hawaiian has also secured a second flight route to Tokyo, which will boost the company’s international competitiveness.
3. Delta Air Lines (DAL)
Delta has had a horrible year, which is good for investors that want to buy on the cheap. The stock has fallen 14.2% on the year and the company reduced growth capacity to below 2% on May 16.
Measures have been put in place to lower risk for the company.
On the investment side, the company boosted its dividends 50% to a 2% yield, and returned 70% of its $4.5 – $5.5 billion in free cash flow to shareholders.
