Despite inflation in the sectors that supply the aviation industry, the overall success of airlines’ rebound from the pandemic-era travel troubles has led to a bustling travel industry. As such, it appears the airline stocks to buy now have dedicated customer bases serving critical regional and international routes.
Moreover, several summer routes have seen a gentle price drop as demand plays into the cost of coach tickets for the average American passenger. This decreased demand can be attributed to the American propensity for decreased air travel in times of financial hardship, especially when the U.S. highway system and lower gas prices can entice vacationers toward the road trip method of getting around.
For investors who want to insulate their airline portfolios from these trends, the best airline stocks to buy now are those that can survive cyclical supply and demand issues while providing steady earnings.
International Consolidated Airlines Group (ICAGY)
A multinational conglomerate of some of Europe’s most significant airlines, International Consolidated Airlines Group (OTCMKTS:ICAGY), or IAG for short, has slowly been working towards regaining its footing since 2020. The company’s most notable subsidiaries include British Airways and Iberia, both of which operate consistent transatlantic routes.
Since the pandemic, the company’s overall share value has seen a series of ups and downs that have kept it below half of its value, but its most recent Q1 earnings report for 2024 could clue us in on a comeback. Over the last quarter, IAG was able to increase total revenue from 5.89 billion EUR to 6.43 billion EUR year-over-year. That resulted in losses after tax diminishing to just 4 million euros compared to 87 million the year prior.
The company also decreased its net debt by 1.8 billion EUR for the quarter, year-over-year. These signs of financial recovery are the first seeds of a potential long-term growth stock among the best airline stocks to buy now.
Copa Holdings (CPA)
Perhaps one of the biggest challenges for legacy U.S. airlines has been cracking into the South American air travel market. However, this is where Copa Holdings (NYSE:CPA) excels with its Copa Airlines and AeroRepublica subsidiaries. In the case of Copa Airlines, CPA has strategically positioned itself as Panama’s national airline using geography and careful fleet management to keep flights to South America affordable and accessible to its customers.
As a result, CPA’s share value has recovered nicely from the pandemic, with it now trading within its pre-pandemic price levels. Moreover, the company is exceptionally savvy when it comes to aircraft expenses, opting to operate lower-cost Boeing (NYSE:BA) 737s, primarily from the 737-700 and 737-800 generations, with a few MAX 8s and MAX 9s mixed in.
By flying multi-leg routes from the United States with these 737s to Panama, the airline acts as an effective bridge to the South American continent, while keeping costs impressively low. This bodes well for investors in CPA as South America continues to develop and demand for affordable air travel increases. Pair this potential with a 6.69% dividend yield, and the company looks like a strong long-term buy.
Turk Hava Yollari (TKHVY)
Though its business name might not ring any bells for retail investors, Turk Hava Yollari’s (OTCMKTS:TKHVY) Turkish Airlines subsidiary has dominated long-haul routes to South Eastern Europe and Turkiye. As Turkiye’s national flag carrier, the company is almost half owned by the country’s government, at 49.12%, with the other 50.88% of shares for sale on the public markets.
That provides a level of stability difficult to find among private airlines, as it’s in the Turkish government’s best interest to keep the airline afloat and competitive in pricing and routes. Moreover, the company’s advantage in using Turkiye for its main hubs means its primary long-range fleet of Airbus (OTCMKTS:EADSY) A350-900s, Boeing 777-300s, 787-9s and A330-300 can touch locations across all continents except Antarctica.
Thanks to this geography and the careful acquisition of aircraft to exploit it, Turkish Airlines has seen its revenue grow from $13.2 billion to $20.9 billion in just four years.
On the date of publication, Viktor Zarev did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
