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The gradual de-escalation of the Israel-Iran conflict has led to a decline in oil prices. This is a positive for the Zacks Transportation - Airline industry as expenses on fuel represent a key input cost for airlines. Signals of the easing of tariff tensions are another positive factor anticipated to boost the air-travel demand scenario. The shareholder-friendly approach of airlines also bodes well.
As a result, we believe that investors interested in the industry would do well to bet on stocks like LATAM Airlines, Copa Holdings and SkyWest for higher returns.
About the Industry
The Zacks Airline industry players are engaged in transporting passengers and cargo to various destinations globally. Most operators maintain a fleet of multiple mainline jets in addition to several regional planes. Their operations are aided by their regional airline subsidiaries and third-party regional carriers.
Additionally, industry players utilize their respective cargo divisions to offer a wide range of freight and mail services. The players invest substantially to upgrade technology. The industry, apart from comprising legacy carriers, includes low-cost players.
The well-being of companies in this group is linked to the health of the overall economy. For example, the aviation space was one of the worst pandemic-hit corners, with passenger revenues taking a beating. However, air travel demand has improved from the pandemic lows.
Factors Relevant to the Industry's Fortunes
IATA’s Bullish View on 2025 Passenger Revenues: The International Air Transport Association or IATA expects 2025 total revenues to reach $979 billion. Passenger revenues are the biggest driver of the top-line projection. Per IATA, passenger revenues in 2025 are anticipated to be $693 billion, which is not only an all-time high but also 1.6% above 2024 actuals. Ancillary revenues are expected to be 6.7% above 2024 levels. Despite the trade tensions, a record 4.99 billion people are expected to take to the skies globally in 2025. The projection is 4% higher than the 2024 actuals.
Strong Financial Returns for Shareholders: With economic activities gaining pace from the pandemic lows, more and more companies are allocating their increasing cash pile by way of dividends and buybacks to pacify long-suffering shareholders. This underlines their financial strength and business confidence.
Among airlines, Delta Air Lines’ board of directors approved a dividend hike of 25%, thereby raising its quarterly cash dividend to 18.75 per share (75 cents annualized) from 15 cents (60 cents annualized). The raised dividend will be paid on Aug. 21, 2025, to Delta’s stockholders of record at the close of business on July 31, 2025.
The move reflects Delta’s intention to utilize free cash to enhance its shareholders’ returns. This was the second successive year in which Delta increased its quarterly dividend payout after a COVID-19-induced hiatus.
Low Fuel Costs: The southward movement of oil prices bodes well for the bottom-line growth of industry participants. This is because fuel expenses are a significant input cost for airlines. Per IATA, the average jet fuel cost is expected to be $86 per barrel in 2025, down from $99 per barrel in 2024. The total fuel bill in 2025 is expected to be $236 billion, down from the $261 billion recorded in 2024.
Oil prices moved north following Israel’s attack on Iranian nuclear facilities on June 13. However, with signs of hostilities easing between the two countries, oil prices have declined, a tailwind for airlines.
Uptick in Labor Costs: The increase in expenses on the labor front represents a challenge for airlines. With U.S. airlines grappling with a labor shortage in the post-COVID-19 high-demand scenario, the bargaining power of various labor groups has naturally increased. As a result, we have seen pay-hike deals being inked in the space. This is resulting in a spike in labor costs, limiting bottom-line growth in turn.
Zacks Industry Rank Signals Bright Prospects
The Zacks Airline industry is a 25-stock group within the broader Zacks Transportation sector. The industry currently carries a Zacks Industry Rank #48, which places it in the top 20% of 244 Zacks industries.
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Before we present a few stocks that you may want to add to your portfolio, let’s look at the industry’s recent stock-market performance and its valuation picture.
Industry Surpasses Sector and S&P 500
Over the past year, the Zacks Transportation - Airline industry has returned 22.7% compared with the S&P 500 composite’s rise of 9.6%. The broader sector has declined 9.2% in the said time frame.
Valuation Picture
The price/sales (P/S) ratio is often used to value airline stocks. The industry currently has a forward 12-month P/S of 0.55X compared with the S&P 500’s 5.1X. It is also below the sector’s forward-12-month P/S of 1.37X.
Over the past five years, the industry has traded as high as 1.06X, as low as 0.33X, and at the median of 0.49X.
3 Airline Stocks to Bet On
LATAM Airlines is headquartered in Santiago, Chile. The carrier is being aided by strong air travel demand.
In the first quarter of 2025, LATAM Group saw a strong increase in air travel demand. The group expanded its consolidated capacity by 7.3%, largely due to a 10.7% boost in international operations. LATAM transported nearly 21 million passengers during the quarter, a 3.6% increase compared to the same period in 2024. Over the past 60 days, the Zacks Consensus Estimate for 2025 earnings has been revised 28.8% upward. LATAM Airlines currently sports a Zacks Rank #1 (Strong Buy).
Copa Holdings, based in Panama City, Panama, currently carries a Zacks Rank #2 (Buy). Copa Holdings is benefiting from strong air travel demand owing to factors like regional economic expansion, its ability to adapt to market trends, and its focus on innovative strategies.
Despite the tough conditions, primarily due to currency headwinds, the airline demonstrated resilience and beat the Zacks Consensus Estimate for earnings in each of the past four quarters. The average beat was 5.5%. The Zacks Consensus Estimate for current and next-year earnings has been revised 6.3% and 4.5% upward over the past 60 days, respectively.
SkyWest is based in St. George, UT. SkyWest operates as a regional airline in the United States through its subsidiary SkyWest Airlines. It offers high-quality regional service to airports located primarily in the Midwestern and Western United States, as well as Mexico and Canada.
Low fuel costs are aiding the bottom line. The stock has gained 7.5% over the past three months. Over the past 60 days, the Zacks Consensus Estimate for 2025 earnings has been revised 3.5% upward. SkyWest currently carries a Zacks Rank #2.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights LATAM Airlines, Copa, SkyWest and Delta Air Lines
For Immediate Release
Chicago, IL – June 26, 2025 – Today, Zacks Equity Research discusses LATAM Airlines (LTM - Free Report) , Copa Holdings (CPA - Free Report) , SkyWest (SKYW - Free Report) and Delta Air Lines (DAL - Free Report) .
Industry: Airline
Link: https://www.zacks.com/commentary/2553709/3-solid-stocks-to-bet-on-from-the-prospering-airline-industry
The gradual de-escalation of the Israel-Iran conflict has led to a decline in oil prices. This is a positive for the Zacks Transportation - Airline industry as expenses on fuel represent a key input cost for airlines. Signals of the easing of tariff tensions are another positive factor anticipated to boost the air-travel demand scenario. The shareholder-friendly approach of airlines also bodes well.
As a result, we believe that investors interested in the industry would do well to bet on stocks like LATAM Airlines, Copa Holdings and SkyWest for higher returns.
About the Industry
The Zacks Airline industry players are engaged in transporting passengers and cargo to various destinations globally. Most operators maintain a fleet of multiple mainline jets in addition to several regional planes. Their operations are aided by their regional airline subsidiaries and third-party regional carriers.
Additionally, industry players utilize their respective cargo divisions to offer a wide range of freight and mail services. The players invest substantially to upgrade technology. The industry, apart from comprising legacy carriers, includes low-cost players.
The well-being of companies in this group is linked to the health of the overall economy. For example, the aviation space was one of the worst pandemic-hit corners, with passenger revenues taking a beating. However, air travel demand has improved from the pandemic lows.
Factors Relevant to the Industry's Fortunes
IATA’s Bullish View on 2025 Passenger Revenues: The International Air Transport Association or IATA expects 2025 total revenues to reach $979 billion. Passenger revenues are the biggest driver of the top-line projection. Per IATA, passenger revenues in 2025 are anticipated to be $693 billion, which is not only an all-time high but also 1.6% above 2024 actuals. Ancillary revenues are expected to be 6.7% above 2024 levels. Despite the trade tensions, a record 4.99 billion people are expected to take to the skies globally in 2025. The projection is 4% higher than the 2024 actuals.
Strong Financial Returns for Shareholders: With economic activities gaining pace from the pandemic lows, more and more companies are allocating their increasing cash pile by way of dividends and buybacks to pacify long-suffering shareholders. This underlines their financial strength and business confidence.
Among airlines, Delta Air Lines’ board of directors approved a dividend hike of 25%, thereby raising its quarterly cash dividend to 18.75 per share (75 cents annualized) from 15 cents (60 cents annualized). The raised dividend will be paid on Aug. 21, 2025, to Delta’s stockholders of record at the close of business on July 31, 2025.
The move reflects Delta’s intention to utilize free cash to enhance its shareholders’ returns. This was the second successive year in which Delta increased its quarterly dividend payout after a COVID-19-induced hiatus.
Low Fuel Costs: The southward movement of oil prices bodes well for the bottom-line growth of industry participants. This is because fuel expenses are a significant input cost for airlines. Per IATA, the average jet fuel cost is expected to be $86 per barrel in 2025, down from $99 per barrel in 2024. The total fuel bill in 2025 is expected to be $236 billion, down from the $261 billion recorded in 2024.
Oil prices moved north following Israel’s attack on Iranian nuclear facilities on June 13. However, with signs of hostilities easing between the two countries, oil prices have declined, a tailwind for airlines.
Uptick in Labor Costs: The increase in expenses on the labor front represents a challenge for airlines. With U.S. airlines grappling with a labor shortage in the post-COVID-19 high-demand scenario, the bargaining power of various labor groups has naturally increased. As a result, we have seen pay-hike deals being inked in the space. This is resulting in a spike in labor costs, limiting bottom-line growth in turn.
Zacks Industry Rank Signals Bright Prospects
The Zacks Airline industry is a 25-stock group within the broader Zacks Transportation sector. The industry currently carries a Zacks Industry Rank #48, which places it in the top 20% of 244 Zacks industries.
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Before we present a few stocks that you may want to add to your portfolio, let’s look at the industry’s recent stock-market performance and its valuation picture.
Industry Surpasses Sector and S&P 500
Over the past year, the Zacks Transportation - Airline industry has returned 22.7% compared with the S&P 500 composite’s rise of 9.6%. The broader sector has declined 9.2% in the said time frame.
Valuation Picture
The price/sales (P/S) ratio is often used to value airline stocks. The industry currently has a forward 12-month P/S of 0.55X compared with the S&P 500’s 5.1X. It is also below the sector’s forward-12-month P/S of 1.37X.
Over the past five years, the industry has traded as high as 1.06X, as low as 0.33X, and at the median of 0.49X.
3 Airline Stocks to Bet On
LATAM Airlines is headquartered in Santiago, Chile. The carrier is being aided by strong air travel demand.
In the first quarter of 2025, LATAM Group saw a strong increase in air travel demand. The group expanded its consolidated capacity by 7.3%, largely due to a 10.7% boost in international operations. LATAM transported nearly 21 million passengers during the quarter, a 3.6% increase compared to the same period in 2024. Over the past 60 days, the Zacks Consensus Estimate for 2025 earnings has been revised 28.8% upward. LATAM Airlines currently sports a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Copa Holdings, based in Panama City, Panama, currently carries a Zacks Rank #2 (Buy). Copa Holdings is benefiting from strong air travel demand owing to factors like regional economic expansion, its ability to adapt to market trends, and its focus on innovative strategies.
Despite the tough conditions, primarily due to currency headwinds, the airline demonstrated resilience and beat the Zacks Consensus Estimate for earnings in each of the past four quarters. The average beat was 5.5%. The Zacks Consensus Estimate for current and next-year earnings has been revised 6.3% and 4.5% upward over the past 60 days, respectively.
SkyWest is based in St. George, UT. SkyWest operates as a regional airline in the United States through its subsidiary SkyWest Airlines. It offers high-quality regional service to airports located primarily in the Midwestern and Western United States, as well as Mexico and Canada.
Low fuel costs are aiding the bottom line. The stock has gained 7.5% over the past three months. Over the past 60 days, the Zacks Consensus Estimate for 2025 earnings has been revised 3.5% upward. SkyWest currently carries a Zacks Rank #2.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.