Although airfares are finally falling, airline stocks could have another impressive year. Travel demand is still robust and they will capitalize on this boom, especially in the summer.

With international tourism set to return to pre-pandemic levels in 2024, airlines could have another great year. Most airlines are in a rush to increase capacity, with global air travel set to hit a record in 2024. Demand will likely strengthen from Asia-Pacific and have a further upside from a potential recovery in China.

Another positive is that lower fares could spark increased demand over the summer. Airlines have also cited another source of strength – corporate travel. One-on-one meetings and site visits are back. As a result, airlines are seeing tremendous demand from corporate travelers from sectors like technology and financial services.

Surprisingly, the airline sector continues to trade at rock-bottom valuations despite the improving fundamentals. These airline stocks trade at a discount to the market, presenting a substantial upside.

Top Airline Stocks: United Airlines (UAL)

United Airlines (NASDAQ:UAL) just reported impressive first-quarter results. Due to robust demand in Europe and the Pacific, passenger revenue grew by 11% year-over-year. As a result, the airline achieved operating revenue of $12.5 billion, compared to $11.4 billion in the prior-year quarter.

On the profitability front, the airline reported a pre-tax loss of $79 million. But it’s worth noting that this loss was due to the Boeing (NYSE:BA) 737 MAX 9 grounding, which caused a negative impact of $200 million. Without the grounding, United Airlines would have turned a profit. Looking at other metrics, free cash flow generation was robust at $1.5 billion for the quarter.

United Airlines has been one of the best airline stocks to buy for growth due to its ambitious growth plan. However, production issues at Boeing may curtail these plans. Still, it expects deliveries of 61 narrowbody and 5 widebody aircraft in 2024.

Utilizing these planes, the company plans to expand its mid-continent hubs and grow its international network further. For instance, it has announced three new routes between Marrakesh, Morocco and New York/Newark; Cebu, Philippines and Tokyo-Narita; and Medellin, Colombia and Houston.

Although its expansion plans might slow, United will still expand its mid-continent and international routes in 2024. Based on 2024’s guidance of $9 to $11 in EPS, UAL stock is dirt cheap at 5 times forward earnings.

Ryanair (RYAAY)

European low-cost carrier Ryanair (NASDAQ:RYAAY) is one of the most efficient operators. The airline is the largest intra-European operator known for its ultra-low-cost fares. It has also gained popularity due to its eccentric CEO, Michael O’Leary.

Ryanair stands out as one of the top airline stocks in investing circles due to its relentless focus on operational efficiency. Due to its focus on financial stability and cost discipline, it has emerged from the pandemic in greater shape than European competitors.

Already, the airline is well-positioned for another bumper summer season. Due to the constrained capacity exacerbated by the lack of aircraft deliveries, especially from Boeing, it sees opportunity. It has been expanding capacity and aims to capitalize on this shortfall.

In the third quarter fiscal year 2024 earnings call, management disclosed that it expects to have 50 more Boeing 737s than in summer 2023. This will expand its fleet to 174 Boeing 737s for the peak summer season. Moreover, it plans to roll out 169 new routes, including flights to Morocco and Albania.

Ryanair’s market-leading position in Europe enables it to profit from the summer travel. Fundamentally, it’s a solid pick and has one of the strongest balance sheets among airline stocks. It is the highest-rated airline with a BBB+ rating from Fitch and S&P.

Delta Airlines (DAL)

Delta Airlines (NYSE:DAL) is the best airline in North America in terms of operations and customer experience. The first quarter results reinforced this position, with operating revenues growing 6% YOY to $12.6 billion. This strength was driven by a 14% growth in managed corporate travel, where Technology, Consumer Services and Financial Services showed momentum.

Delta achieved growth in both domestic and international markets. Due to strong demand trends, total domestic revenues grew 5% YOY. Meanwhile, international revenues were up 12%, driven by unit growth in Transatlantic.

Among airline stocks, Delta is a superior investment due to its diverse, high-margin revenues. In the quarter, premium revenues rose 10% YOY. The segment is a growth driver going forward since Delta is adding more premium seats to its aircraft. Total royalty revenue was another bright spot, with 12% growth mainly from the American Express (NYSE:AXP) co-brand portfolio.

In terms of outlook, management set an optimistic tone for the June quarter, issuing guidance for 5% to 7% revenue growth. Additionally, management’s 2024 outlook forecasts free cash flow of $3 to $4 billion and EPS of $6 to $7. That equates to a 10% free cash flow yield and a forward P/E of 8.

On the date of publication, Charles Munyi 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.