The airline industry has been flying high since 2022, thanks to the post-pandemic “revenge travel” trend, but after a rare period of strong operating and stock price performance, now may be the right time to consider what are the airline stocks to sell.

Since July, shares in legacy and budget carrier alike have plunged, as soaring labor and fuel costs point to greater uncertainty over future results. To some, the across-the-board price declines may suggest that this uncertainty is already baked into airline stock valuations.

However, these stocks may still have a way to go before the dust truly settles. Only starting now to walk back earnings forecasts, a worsening of the situation (like say, from a possible 2024 recession that curbs air travel demand) could cause an additional round of price declines.

With these seven airline stocks to sell, not only is the possibility of industry headwinds a major risk to future performance. Sometimes, there’s possible turbulence from company-specific headwinds as well.

American Airlines (AAL)

Shares in legacy carrier American Airlines (NASDAQ:AAL) have tumbled sharply since the airline sell-off began two months ago.

AAL has during this time frame dropped from just above $19 per share, down to around $13.30 per share as of this writing.

Yet even after dropping by 30%, more declines may be on the radar for AAL stock. At first, it could appear that the market has priced in the prospect of lower profitability. Shares today trade for just 4.5 times forward earnings. Still, management has warned investors to brace for impact, more bad news may lie ahead.

For instance, with the carrier’s flight attendants threatening to strike, American may be forced to concede to another costly labor deal.

Other unpleasant surprises may be revealed in October, when the company releases its next quarterly earnings report. Ahead of another potential plunge, stay away from AAL.

Alaska Air Group (ALK)

Alaska Air Group (NYSE:ALK) is definitely a name to include on any airline stocks to sell list. This airline is more of a low-cost carrier than a legacy carrier, but like American Airlines it too is contending with soaring costs, in particular soaring pilot labor costs.

Alongside rising costs, softening demand is also a risk with ALK stock. As InvestorPlace’s Alex Siriois pointed out earlier this month, the airline itself has conceded this will result in miniscule (3%) revenue growth this quarter. Yes, sell-side consensus calls for earnings growth in 2024.

This may explain ALK’s valuation (around 6.7 times forward earnings) is at a premium to peers.

However, keep in mind that these forecasts range widely, with some calling for Alaska Air Group to report a sharp earnings decline next year. As any further disappointment with future results could knock ALK to new multi-year lows, avoid.

Delta Airlines (DAL)

Compared to AAL, Delta Airlines (NYSE:DAL) has experienced a smaller decline in price since the airline stock sell-off kicked off in July, falling by less than 20% during this time.

However, while DAL stock hasn’t been knocked down to a lesser extent, don’t assume that means a lower level of downside risk ahead.

As a Seeking Alpha commentator recently argued, Delta Airlines is dealing with the same negative macro trends affecting the competition. These negative trends are also likely to continue.

Another sell-off may be on the horizon for DAL, and much sooner than the possible upcoming sell-off for AAL. Delta is less than a month away from reporting results for the quarter ending Sep. 30.

While the airline has warned investors through a walking back of guidance, an earnings miss or the release of additional discouraging outlook may spark a sharp post-earnings drop.

Hawaiian Holdings (HA)

Unlike most of the other airline stocks to sell, it’s not as if Hawaiian Holdings (NASDAQ:HA) merely faces the prospect of becoming less profitable.

As I pointed out back in August, this carrier didn’t manage to make a post-Covid return to profitability.

Although Hawaiian’s results have improved in recent quarters, it has continued to be unprofitable, as seen with a reported $12.3 million net loss last quarter. When I last wrote about HA stock, at the time there was an expected that the company would re-hit full-year profitability in 2024.

However, the sell-side has since materially revised its forecasts. Instead of reporting earnings of 21 cents per share next year, consensus now calls for a net losses of $1.03 per share.

HA may trade at lower prices today than it did when Covid lockdowns first hit in 2020, but this profitability problem could knock it even lower.

JetBlue Airways (JBLU)

With JetBlue Airways (NASDAQ:JBLU), it’s a fading potential catalyst that makes it one of the airline stocks to avoid.

As you may recall, JetBlue announced plans to merge with rival low-cost carrier Spirit Airlines (NYSE:SAVE) over a year ago. Unfortunately, regulatory pushback over the proposed transaction has left the merger in “pending” status.

Not only that, even as the carrier has attempted to convince regulators to approve the deal, through actions like planned divestitures, other factors may prevent the deal from ultimately going through. So, why is the increased likelihood of a canceled merger bad news for JBLU stock?

The cost synergies from this deal could in theory help JetBlue mitigate the impact of a post-“revenge” slowdown in air travel. Without the deal, however, after reporting a swing back to profitability last quarter, the carrier could dip back into the red in the quarters ahead.

Southwest Airlines (LUV)

For a long time, Southwest Airlines (NYSE:LUV) benefited from the perception that it was much better-run than its major competitors. However, in the past year, Southwest’s reputation among customers has taken a big hit, because of unanticipated mass cancellations of flights, last December and last April.

The reputation of LUV stock among investors has taken a big hit as well. The cancellation problems, coupled with the spiking cost problem airlines industry-wide are experiencing, has knocked shares back down to near their 52-week low.

Despite this stock price pullback, though, one thing has not gone away: LUV’s big valuation premium to other airline stocks.

LUV today trades for 15.3 times earnings, while comparable names mostly sport single-digit forward earnings multiples.

I’m not saying LUV will soon trade at a similar multiple, but as tough times continue for the air travel space, further de-ratings may be in the cards.

Mesa Air Group (MESA)

It may seem like it’s far too late to declare that Mesa Air Group (NASDAQ:MESA) is one of the top airline stocks to sell.

Shares have fallen by more than 91% over the past five years.

With this, I’ll admit that those holding this stock don’t need to hear once more that MESA stock has been a poor-performing investment. Still, there may be some contrarians interested in rolling the dice.

After all, recent efforts to right-size the business, including the sale of excess aircraft, may suggest the potential for clear skies ahead, right?

Not so fast. The regional air carrier’s turnaround efforts could stall, as industry conditions grow less favorable. Even if a turnaround takes shape, it’s more-than priced-in.

Shares trade for 22.1 times estimated earnings for the fiscal year ending September 2024. Instead of being a “bottom-fisher’s buy,” MESA remains a stock to sell/avoid.

On the date of publication, Thomas Niel 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.