Airline stocks are particularly weak at the moment. Recession fears are spiking again as rate concerns increase, threatening spending overall along with travel in the process. And unfortunately, there isn’t a clear case favoring investment in the airline industry at the moment. That being said, here are some of the top airline stocks to sell today.
Airline Stocks: Spirit Airlines (SAVE)
A yellow, Spirit Airlines (SAVE) branded airplane flying in the air
Source: Markus Mainka / Shutterstock.com
SpiritAirlines (NYSE:SAVE) is an airline stock that investors and travelers should stay away from. The company is not well regarded by travelers. Many of them simply believe that Spirit Airlines’ lower prices simply don’t justify the experience and later vow not to fly the airline again. I’m one of them but that’s a story for another time.
Generally speaking, Spirit Airlines is a poor investment for many reasons. For example, Spirit Airlines could not produce a net gain in the second quarter even as revenues continued to grow beyond $1.4 billion. It also lacks financial and profitability strength relative to its peers.
American Airlines plane on ramp in Chicago Airport. American Airlines is amongst the airlines cancelling flights
Source: GagliardiPhotography / Shutterstock.com
American Airlines (NYSE:AAL) should also be avoided. Granted, American Airlines reported record revenues in the second quarter but there are some real concerns in those numbers. For example, even though travelers are continuing to pass through Transportation Security Administration (TSA) checkpoints at higher and higher rates, the airline still saw its load factor decline by 0.7% in Q2. In other words, more people traveled in Q2 ‘23 than in Q2 ‘22 overall but American Airlines saw its passenger load shrink anyway.
Airline Stocks: United Airlines (UAL)
a jet takes off on a clear runway.
Source: m.photo / Shutterstock.com
UnitedAirlines (NASDAQ:UAL) should also be avoided.
Back in July, the Chicago-based carrier tightened its 2023 EPS from between $10 to $12 to between $11 to $12 when it released earnings. That sent share prices above $57. They’ve fallen back to $42 since and I expect further price retreats. Of course, higher fuel input prices will cut directly into those earnings that United Airlines was so confident about just weeks ago. I fully expect that Q3 earnings guidance will suffer as a result of both factors. In turn, share prices will fall.
Hawaiian Holdings (HA)
stock image of the interior of a passenger aircraft. Airline stocks are up again.
Source: Shutterstock
Hawaiian Holdings (NASDAQ:HA) isn’t an easy stock to judge at the moment. That said, I’d err on the side of caution currently. There’s reason for optimism and pessimism in other words and I think the negatives outweigh the positives.
The negatives are driven by the same externalities I’ve mentioned in relation to other stocks above. Those factors threaten to harm it and exacerbate Hawaiian Holdings’ issues. That leads me to believe that investors are going to focus on Hawaiian Holdings’ losses sooner or later. Even with tourism surging in 2023 the company managed to lose $110 million in H1. It becomes more and more difficult to justify investing in that kind of company when the economy weakens.
I might be wrong, though. The Japanese economy is proving particularly resilient with GDP figures that were much better than expected. That matters for Hawaiian Holdings because the company derives significant revenues from Japanese tourists. Those tourists could flock to Hawaii on optimism borne of the strong GDP numbers. That said, there is no clear-cut case favoring HA stock at the moment and H1 losses reaffirm my belief in selling it.
Skywest (SKYW)
A close-up shot of a SkyWest (SKYW) plane.
Source: Heather Dunbar / Shutterstock.com
I’m confused about the reason that Skywest (NASDAQ:SKYW) stock is so well regarded at the moment. Recent headlines highlight the fact that Skywest has shown strong momentum although it has essentially plateaued since July.
That indicates that investors are hesitant about it overall. However, I am confused about why they favored SKYW shares in the first place. Everything measurable for the firm has headed in the wrong direction this year. Revenues, profitability, income, and more are all declining. Yet investors flooded into the shares anyway.
Again, 2023 has been a boon to travel. Yet, Skywest reported a first-half loss of $6.65 million during the period. A year ago that figure was $71.7 million in the black. I do not understand why demand for its shares remains high. Therefore, I do not recommend buying it, especially given the overall state of the industry and a weakening economy.
JetBlue (JBLU)
Source: Shutterstock
JetBlue (NASDAQ:JBLU) investors should be worried about fuel costs and their effects on JetBlue in particular. High fuel costs contributed heavily to high expenses that led to losses at the company a year ago. Oil prices continue to rise and that means Jetblue could post losses again due to the reemergence of those costs. Most of its positive catalysts are gone and negative catalysts are again cropping up. That’s a powerful combination that should cause investors to avoid JBLU stock.
Mesa Air Group (MESA)
mesa airlines (MESA) logo on a mobile phone with clear sky in the background
Source: IgorGolovniov / Shutterstock.com
MesaAirGroup (NASDAQ:MESA) revenues are declining while losses deepen. Those losses were particularly acute in the second quarter at $40 million whereas the company eked out a $213k net gain a year earlier.
Consider that Mesa Air Group has less than $50 million in cash on hand and eyebrows should rise. The simple math indicates that the company cannot continue to operate its business for that much longer. MESA shares will remain volatile and for day traders there’s plenty to like for that reason. However, any long-term investor should stay away. Management offers no guidance and increasing fuel costs could spike its losses again. It’s very difficult to gauge the shares as a result.
On the date of publication, Alex Sirois did not have (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.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
