Thanksgiving Traffic to Set Record: 3 US Airline Stocks to Buy

With air travel demand bouncing back from the pandemic lows, stocks from the Zacks Transportation - Airline industry are being served well. Air travel has continued to be particularly strong on the leisure front. Encouragingly, international demand is bouncing back.

U.S. airline stocks are likely to continue flying high, with air travel demand likely to swell during the Thanksgiving holiday travel period. The record projection by the Airlines for America (A4A) — the trade organization for leading U.S. airlines — for the Thanksgiving travel period (Nov. 22-Dec. 2) highlights the bullish scenario concerning passenger revenues. Following the record-setting projection, investing in airline stocks like United Airlines (UAL Quick QuoteUAL - Free Report) , American Airlines (AAL Quick QuoteAAL - Free Report) and Southwest Airlines (LUV Quick QuoteLUV - Free Report) appears prudent.

Bullish Thanksgiving Period Forecasts

A4A expects airline companies to make hay in the Thanksgiving travel period. The trade group predicted that the Thanksgiving of 2024 will be the busiest season for American air travel carriers.

Per A4A’s forecast, more than 31 million passengers will be transported through U.S. airlines during this Thanksgiving travel period, which is an all-time high. This implies that, on average, 2.8 million passengers will fly per day over the said period, suggesting a 5% rise from the 2023 reported level. U.S. carriers attracted nearly 29 million passengers during the last-year period and 28 million flew in 2019 (pre-pandemic).

To cater to the increased demand, U.S. passenger carriers will offer 150,000 more seats daily over the period on a year-over-year basis. U.S. carriers have invested significantly to upgrade travel services, which bodes well for passengers. Despite inflation-related worries resurfacing, more Americans are taking vacations, which is another positive.

A4A expects 3 million passengers to fly each day on Nov. 27 and Dec. 1 — which are likely to be the busiest days during the period. In New York and New Jersey alone, a record 8.7 million people are expected to travel over the holiday period.

Delta Air Lines (DAL Quick QuoteDAL - Free Report) expects the Thanksgiving holiday period to be the busiest ever, with 6.5 million passengers expected to fly by its planes between Nov. 22 and Dec. 3. An average of 540,000 passengers are expected to fly each day during the 12-day travel period, marking a 5% year-over-year increase.

3 Airline Stocks to Bet on

Given the encouraging backdrop, we believe investors should add airline stocks to their portfolios now. The three selected stocks have outperformed the industry year to date in terms of price.

YTD Price Comparison

Image Source: Zacks Investment Research

United Airlines, based in Chicago, currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for current and next-year earnings have been revised 4.6% and 5.9% upwards, respectively, over the past 60 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

UAL expects this Thanksgiving holiday period to be its busiest ever. The carrier expects 6.2 million passengers to fly between Nov. 21 and Dec. 3. Per the forecast, nearly 480,000 people per day will fly on UAL flights — about 30,000 more people per day than last year.

American Airlines currently has a Zacks Rank #2. The Zacks Consensus Estimate for the company’s current and next-year earnings have been revised 39.3% and 10.2% upwards, respectively, over the past 60 days.

AAL expects to transport 500,000 more passengers during the 2024 Thanksgiving travel period than last year. The airline anticipates 8.3 million passengers to fly on more than 77,000 AAL flights between Nov. 21 and Dec. 3. AAL expects Dec. 1 to be the busiest travel day.

Southwest Airlines, based in Dallas, currently carries a Zacks Rank #2. The Zacks Consensus Estimate for current-year and next-year earnings have been revised 212.5% and 21.1% upwards, respectively, over the past 60 days.

Upbeat air travel demand is aiding Southwest Airlines immensely. Buoyant passenger volumes during the Thanksgiving travel are likely to support top-line growth. LUV, too, expects to be busy during the Thanksgiving holiday period, with millions of passengers likely to board its flights.