Stocks in the airline industry, as tracked by the U.S. Global Jets ETF (NYSE:JETS), have surged more than 20% since early November. This underscores a new bull market phase, fueled by strong demand and optimistic future projections.
Earlier this year, airline stocks were riding high on the anticipation of a summer travel rebound. However, their ascent hit some turbulence in mid-July. Rising oil prices and fears of a global economic slowdown clouding the skies.
Compared to pre-pandemic levels of January-February 2020, the sector still trades at about a 40% discount. This offers substantial upside potential for investors looking for an industry yet to fully recover from the pandemic.
Chart: Airline Stocks Are 25% Higher Than 2023 Lows, Yet 40%+ Lower Than Pre-Covid Levels
Hawaiian Holdings Inc. (NASDAQ:HA) was the top stock contributor to the recent airline industry rally. It experienced an astonishing 220% increase in its stock price in the past month, thanks to Alaska Air Group Inc. (NYSE:ALK)’s takeover.
Southwest Airlines Co. (NYSE:LUV), Delta Air Lines Inc. (NYSE:DAL), and American Airlines Group, Inc. (NYSE:AAL) all screened among the main contributors to the JETS rally, each witnessing a robust uptick of approximately 20% in their stock prices.
Sun Country Airlines Holdings Inc. (NASDAQ:SNCY) observed above-average returns, up by 30% in the past month; Frontier Group Holdings Inc. (NYSE:ULCC), up 28% during the same period, and Embraer S.A. (NYSE:ERJ), which saw a 26% boost.
Read Also: 2024’s Potential Stock Surprises: Goldman Sachs Unveils S&P 500 Laggards For Major Gains
Airlines Industry Outlook For 2024 Is Positive
The International Air Travel Association (IATA) has painted an optimistic picture for the industry.
In its latest outlook, the association revealed that global demand for air travel remained robust in 2023, with the industry steadily nearing 2019’s passenger traffic levels, buoyed by strong pent-up demand.
A key industry metric, revenue passenger kilometers (RPKs), soared 40.1% in the first nine months of 2023 compared to the same period last year. Capacity utilization reached 82%, aligning with pre-pandemic levels.
Passenger revenues are projected to hit $642 billion in 2023 — a striking 47% increase from 2022, and 7% above 2019 levels. Revenues for next year…
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