The airline industry remains upbeat about demand following its latest round of quarterly earnings, even as more analysts worry about price increases — including for airfares — and concerns about a recession. Are any airline stocks buys now against that backdrop?
Delta Air Lines said it had"yet to see any meaningful pullback in demand." And it said it expected travel to hold up after the peak summer season ends, as corporate and international travel keep rebounding. United CEO Scott Kirby said "the continuing pandemic recovery is more than offsetting economic headwinds."
"You've got to remember, people have not had access to our product for the better part of two years, particularly business and higher-end consumers," Delta CEO Ed Bastian said during the company's earnings call. "And we're not going to satisfy that thirstin the space of a busy summer period."
Still, Cowen analyst Helane Becker, in a research note on Spirit Airlines' (SAVE) earnings, said "we expect there will be some trade down to (ultra-low-cost carriers) from customers feeling the pressure of a tightening budget."
And after airlines encouraged many employees to leave the company as Covid created a black hole in the travel industry two years ago, the industry is now struggling to hire and train workers, particularly pilots, to meet that demand.
That, combined with harsher weather, has led to flight delays and cancellations. Russia's invasion of Ukraine has driven fuel costs higher, although some airlines expect those costs to drift lower up ahead. Delta has cut some summer flights from its schedule, and will keep available seats and flights at June levels.
Below, we take a look at the chart action for airline stocks.
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Spirit Airlines Stock Chart
Spirit Airlines stock is consolidating. Shares were trading at around 24. The stock is down over the past 12 months. But it has found support at its 50-day line and 200-day lines.
Spirit Airlines stock has a 71 Composite Rating and a 50 EPS Rating. IBD generally recommends investors focus on stocks that have stronger ratings and that are closer to their highs.
Spirit last month agreed to merge with JetBlue (JBLU), after a deal with Frontier Airlines (ULCC) fell through.
Delta Stock Chart
Delta stock was below its 200-day line. It was testing support at its 50-day line. The stock's relative strength line has fallen, and then recovered somewhat, over recent days.
Delta's EPS Rating is 67 out of a best-possible 99. Its Composite Rating is 31.
American Airlines Stock Chart
American Airlines stock is testing support at its 50-day line. It was below its 200-day line as well.
Similar to Delta and the other airline stocks here, American Airlines has a weaker 23 Composite Rating and a 64 EPS Rating.
United Airlines Stock Chart
United Airlines stock was below its 50-day and 200-day lines.
United Airlines' ratings, as with other airline stocks, are also mediocre. United has a 30 Composite Rating. Its EPS Rating is 64.
Southwest Stock Chart
Cowen said Southwest stock was the least leveraged airline heading into the pandemic. Raymond James analysts in February said Southwest had a hedge policy in place to use "a combination of instruments" tied to oil for "catastrophic" protection.
Southwest has a 31 Composite Rating and a 68 EPS Rating. The stock was below its 50-day line. It was also below its 200-day line.
JetBlue Stock
JetBlue stock has a Composite Rating of 21 with an EPS Rating of 47. JetBlue (JBLU) is below its 50-day and 200-day lines.
Are Airline Stocks Buys Right Now?
IBD ratings for the airlines are still not great. Bottom line: Airline stocks are not buys right now.
Investors eager to play the recovery could step in once those stocks enter buy zones. But IBD advises investors to seek out stocks with better ratings that are closer to their highs.
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