Investing in Airline Stocks for the Thanksgiving Travel Period
Soaring fuel and labor costs have been eating into the profits of airlines, but the holiday season is expected to turn things in favor of airline companies. The holiday season is an important window for airlines to boost revenues, and this Thanksgiving holiday period is expected to be one of the busiest ones in recent times. Hence, investors should utilize this opportunity and invest in airline stocks like American Airlines Group Inc. (AAL – Free Report), United Airlines Holdings, Inc. (UAL – Free Report) and Delta Air Lines, Inc. (DAL – Free Report).
Thanksgiving Travel to Soar
Airlines took a major hit during the peak of the pandemic and the year after that as travel came to a standstill. However, the industry has since recovered from historic lows and is now gearing up for the upcoming holiday season, which is projected to see a record volume of passenger traffic. A staggering 30 million passengers are expected to be screened between Nov 17 and Nov 28, hitting a record high, the Transportation Security Administration said.
The Sunday following Thanksgiving is projected to be the busiest day within this timeframe, with an estimated 2.9 million passengers expected to travel by air. Weather played spoilsport last year during this time, compelling several airlines to cancel thousands of flights across the country. However, most airlines this year are ready to handle the situation more efficiently. Southwest Airlines (LUV – Free Report) particularly is winter-ready this time around after it had to cancel 16,700 flights last year.
According to the Federal Aviation Administration, Thanksgiving flights are expected to peak at 49,606 on the Wednesday preceding the holiday, surpassing last year’s record of 48,192. Expectations of record passenger traffic are high this year, particularly after airlines recorded robust traffic volumes during the Labor Day weekend.
Pent-up demand has soared since the removal of the pandemic-induced restrictions. Although higher fuel and labor costs have been posing major challenges for the airline industry, optimism is high surrounding air travel this year. This has seen airlines gearing up to accommodate more passengers and adding 253,000 more seats per day during the period. Also, lucrative discounts are being offered to lure flyers. According to flight-tracking site Hopper, Thanksgiving flight deals are currently averaging $248 for domestic round trips. This reflects a decrease from $271 last year and $276 in 2019, the pre-pandemic time.
According to the latest U.S. inflation report from the Department of Labor, overall airfare has declined more than 13%.
Our Choices
Given this situation, it would be ideal to invest in airline stocks. American Airlines Group Inc.’s wholly owned subsidiaries are American Airlines, Envoy Aviation Group, PSA Airlines and Piedmont Airlines. AAL’s primary business is to provide passenger and cargo services. American Airlines Group’s expected earnings growth rate for the current year is 378%. Shares of AAL have gained 7.3% in the past 30 days. American Airlines Group presently carries a Zacks Rank #3 (Hold).
United Airlines Holdings, Inc. transports people and cargo not only throughout North America but also to destinations in Asia, Europe, the Middle East and Latin America. UAL’s hubs are at Newark Liberty International Airport, Chicago O’Hare International Airport, Denver International Airport, George Bush Intercontinental Airport, Los Angeles International Airport, A.B. Won Pat International Airport, San Francisco International Airport and Washington Dulles International Airport. United Airlines Holdings’ expected earnings growth rate for the current year is 286.9%. Shares of UAL have gained 10.4% in the past 30 days. United Airlines Holdings presently has a Zacks Rank #3.
Delta Air Lines, Inc. is one of the four carriers that controls the…