Although the vast majority of airline companies saw their stocks end 2018 in the red, due largely to investors sharing concerns about rising oil prices harming profit margins, hope is abounding for a brighter 2019.
Oil is now priced at less than $60 a barrel, down from its peak of $75 in October 2018, which means that now is the ideal time to invest in some of the most promising airline stocks.
One of the primary reasons why world-leading financial investor Warren Buffett has made an about-turn on his view that airline stocks are now ripe for investment is the reduced competition in the airline sector.
With some airlines forced into closure and others opting to merge, some of the longest-established airlines that have faithful, loyal customer bases and ambitious plans for 2019 and beyond have strengthened their position on the market.
Let’s take a sneak peek into the airline stocks that are looking hot in 2019.
Singapore Airlines – a stock on the rebound?
In the fall of 2018, Singapore Airlines was trading at a 52-week low. This left many people scratching their head given that the airline is considered one of the most reliable and premium-quality service providers in the sector.
It’s even more surprising considering that the forex charts have shown that the Singapore dollar has strengthened against the US dollar in the last 12 months, which also led to investors’ increased interest in the currency.
Given that Singapore Airlines is majority-owned by the Singaporean government, the strengthening of the SGD against the greenback should improve investor confidence in the airline; particularly so after it was named the best airline in the world by the 2019 TripAdvisor Travellers’ Choice Awards.
Spirit Airlines: Radically outperforming the rest of the airline market
Spirit is one of America’s leading low-fair airlines. Famed for its ultra-low-cost seats, Spirit has also managed to improve its non-ticketed revenue per passenger.
The recent disclosure of its Q1 2019 financial results revealed that Spirit’s overall operating revenue totaled $855.8 million, a year-on-year increase of 21.5%.
The airline’s official press release claims that this was largely due to a 16% rise in flight volume and a rise in load factor and passenger yields.
Its total revenue per seat mile was also up 4.1%, confirming that Spirit has hugely outperformed the wider industry in the last 12 months.
Southwest Airlines – dependable track record of profit
For some time, Southwest Airlines has been viewed in a positive light by investors. Their approach to additional passenger luggage and not charging customers for putting more in the hold has continually given the airline a huge consumer advantage.
Combine this with a healthy balance sheet and a disciplined deployment of capital, and it’s easy to see why Southwest continues to have a bright future. With Q1 2019 expected to yield quarterly earnings of 61 cents a share, it is well worth the attention of savvy airline investors.
Alaska Air Group – an airline that is careful with its debt
Alaska Air Group will celebrate its 90th anniversary in 2022, and there is no reason to suggest the airline won’t reach that milestone even though we are three years away in 2019.
Historically, Alaska has long been a regional airline with a primary focus on the north-west and western side of the country but, thanks to its diligent management of finances, Alaska was recently able to buy out Virgin America and pursue longer range routes such as Hawaii.
With minimal debt totaling just $2.27 billion, Alaska Air Group is well placed to deal with any turbulence in the airline industry in 2019.
Although much of the airline industry remains economically sensitive, this quartet of airline stocks should be relatively safe territory for low-risk investors in 2019.