Airline Stocks Cleared For Takeoff In 2024, But Economic And Consumer Confidence Clouds Gather

Cruise operators were the good news travel stocks of 2023 as holidaymakers put to rest the hardships of the Covid pandemic and climbed back aboard. Now in early 2024, it appears the airline stocks are here to join them.

Among the best performing stocks this week are American Airlines (NASDAQ:AAL), up 11% over the past week, United Airlines (NASDAQ:UAL), with weekly gains of 10.1%, Delta Air Lines (NYSE:DAL), climbing 9.2% and Southwest Airlines (NYSE:LUV) up 7.4%.

All four make up the biggest holdings in the U.S. Global Jets ETF (NYSE:JETS), an exchange traded fund that tracks the industry, and has risen 6% in the past week. During 2023, JETS climbed 11.6%, compared to the SPDR S&P 500 ETF (NYSE:SPY), which tracks the S&P 500 Index, which gained 24% during 2023.

Transportation Security Administration data from June indicated that summer air travel returned to its highest levels since 2019. This suggests that travelers weren’t put off by higher interest rates, and the airline industry returned to pre-pandemic levels of activity.

Also Read: The Carnival Is Not Over: A Remarkable Bounceback For Cruise Industry After Punishing 2 Years

Economic Headwinds In 2024

But can they maintain the momentum? Airline stocks are facing several headwinds in 2024 that include the likelihood of an economic slowdown, the risk of higher-for-longer interest rates and an escalation in geopolitical tensions affecting oil prices — fuel is a major cost factor for airlines.

That said, analysts seem to like airlines at the moment.

Following last week’s incident involving Air Alaska Group Inc (NYSE:ALK), where an emergency landing was necessitated after a significant portion of the fuselage from its Boeing 737 Max 9 jet blew out mid-flight, there could be a silver lining for airlines.

This incident might lead to more affordable fleet replacements, as Boeing Co (NYSE:BA) might reduce its prices to counteract the negative impact on its reputation caused by the occurrence.

Closer Look At The Stocks

Delta, which reports its fourth-quarter results on Friday, appears to be universally liked, with no hold or sell ratings from analysts. It currently holds seven “strong buy” and 11 “buy” ratings, according to data from Forbes Advisor.

Forbes Advisor said: “Delta has learned from past disruptions and knows how…