Stock Analysis & Ideas

Air Travel Demand Remains Strong; Which Airline Stock to Buy?

Story Highlights

Air travel demand remains strong despite macro concerns. Airline companies could deliver solid revenues in 2023.

Speaking at the J.P. Morgan 2023 Industrials Conference, the top executives of U.S. airline companies sounded positive regarding air travel demand. Their positive tone comes as a surprise, especially amid higher airfares and pressure on consumer spending. While these executives expect to deliver solid 2023 revenues, let’s leverage TipRanks’ data to narrow down on airline stocks more likely to deliver solid gains.

Which Airline Stock is a Good Buy?

Our Stock Comparison tool shows that shares of Delta Air Lines (NYSE:DAL) offer higher upside potential and are more likely to beat the broader market averages than peers.

DAL’s CEO Ed Bastian said during the conference that the company is witnessing solid demand that is getting stronger. He highlighted that in the last 30 days, Delta registered the 10 highest sales days in the company’s history.

Bastian added, “We’ve had the 10 highest sales days in our company’s history in just the last 30 days. So if anyone’s looking for weakness, don’t look at Delta. We’re seeing great, great strength.”

Thanks to the strong demand, Delta expects its revenue to increase by 15-20% in 2023. Meanwhile, it expects to deliver earnings between $5 and $6 per share. DAL’s EPS outlook indicates more than 100% growth in its bottom line. 

DAL stock has received 14 unanimous Buy recommendations for a Strong Buy consensus rating. Further, analysts’ average price target of $51.54 implies a stellar upside potential of 45.31%. In addition, DAL stock sports a maximum Smart Score of “Perfect 10.” 

Note: Stocks with a maximum Smart Score have outperformed the broader markets by a wide margin.

Bottom Line

The sustained demand for air travel despite macro headwinds is a positive signal for airline companies. 

As for Delta, its solid sales and earnings outlook, a Strong Buy consensus rating, and a maximum Smart Score position it well to outperform peers. 

Investors could also consider United Airlines Holdings (NASDAQ:UAL) stock, which sports a Moderate Buy consensus rating and an Outperform Smart Score. However, note that UAL’s near-term financials could stay pressured. 


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