The recent economic reports have raised concerns about a potential negative future for the United States economy, characterized by stagflation—a troubling situation of rising inflation and slowing economic growth. The latest GDP figures showed a significant slowdown in growth, with the economy expanding at only 1.6% annually, well below expectations. Concurrently, measured by personal consumption expenditures, inflation surpassed forecasts, growing at 2.8%. This is why investing in airline stocks is proving more and more to be the right play.

This combination has sparked fears of stagflation reminiscent of the 1970s, a period of low growth and high inflation that led to challenging economic conditions. While experts caution that stagflation isn’t the base case scenario, ongoing high inflation could force the Federal Reserve to maintain higher interest rates, leading to economic challenges in the coming years.

The global airline industry is valued at $566.66 billion as of 2024, with projections to reach  $794.61 billion by 2028, representing a CAGR of 8.8% in the time frame. Critical factors for this growth include urbanization and the growth in disposable income. With this possible market downturn, the prices for these picks will plunge; you need to invest in these top three airline stocks when that happens because you will be getting a discount on companies sure to give strong returns.

Top Airline Stocks: Southwest Airlines Co. (LUV)

Southwest Airlines Co. (NYSE:LUV) is a passenger-centric airline that offers travel inside the U.S. and regional international destinations. It is currently trading at a valuation of $16.17 billion. As of the last FY, it operated 817 Boeing 737 aircraft and served 121 destinations.

LUV has seen profit and revenue increase post-COVID, with YoY quarterly revenue growth of 10.90%. A profit margin of 1.47% is lower than the industry average of 2.6%, indicating that the airline might have to work on efficiency soon. 

LUV plans to capitalize on the growing industry by redesigning its boarding and seating arrangements. To turn the tide towards profitability, LUV will make its seats thinner while emphasizing ergonomics. This will lead to a higher capacity on the aircraft while ensuring consumer satisfaction.

Corporations taking action to increase profitability embolden investors, with multiple BB banks rating it as a “Buy” or “Overweight” stock. Investors should buy the dip and hold as this is one of the top airline stocks.

United Airlines Holdings Inc (UAL)

United Airlines Holdings Inc (NASDAQ:UAL) is an airline holding company based in the U.S. that has domestic and international operations. The stock is valued at $52.84, a YTD increase of 28.07%. 

UAL’s market cap grew by 28.37% from 2023-2024, from $13.53 billion to $17.37 billion. The revenue was $54,827 billion and experienced revenue growth (YoY) of 12.31%, 132.32% more than the sector median of 5.30%. Gross profit margin was impressive at 33.92%, 9.92% more than the sector average of 30.86%. These metrics convey that United is a profitable company with unlimited short- and long-term growth opportunities.

UAL introduced artificial intelligence via chatbots, automated messages, pilot assistance, and operational coordination. These improvements greatly aid in logistics, coordination, and efficiency and are new to the industry, which means there is room for improvement and potential expansion. Overall, UAL deserves the “Buy” rating, and as the prospect of a market crash occurs, this is an airline stock you want to buy and hold.

Delta Air Lines Inc. (DAL) 

Delta Air Lines Inc. (NYSE:DAL) is a global airline in the U.S. committed to customer service, safety, and innovation. Valued at $49.92, Delta saw 52.43% growth in the past year.  

Delta Airlines reported strong figures across the board ending the fiscal year 2023. Revenue grew 14.76% to $58.048 billion from $50.582 billion the previous year. Net income and diluted EPS grew 249.7% and 248.06%, respectively, beating out many of its competitors. 

As travel demands recover and grow from the depths of the COVID-19 pandemic, the need for quality and reliable airline services matters immensely. Delta Airlines is at the forefront of customer operations and has a consistent flight schedule with few cancellations. Moreover, Delta plans to introduce five new long-haul flights to other countries like Taiwan and Israel from its hubs in the U.S. These flights will help to cater to international passengers, expanding its footprint in the international markets.

On the date of publication, Michael Que 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.

The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.