The boom in summer travel coupled with the post-pandemic resurgence has put several airline stocks to buy now on investors’ radar. 

After a slow 2023, airlines are gearing up for what could be its strongest travel season yet. On July 3rd, The Transportation Security Administration (TSA) screened a record-breaking 3 million passengers in a single day. The spike in travel demand can be attributed to several factors. These include an increasing preference for air travel, innovations in the aviation industry and a thriving economy. 

And while the data point towards a positive trend, the airline industry has its fair share of challenges. One major concern is Boeing (NYSE:BA). Slower production rates as a result of Boeing’s downfall mean that airlines need to spend more money operating less efficient aircrafts. This will result in declining profit margins in the short term.  

Nevertheless, the long-term prospects of the airline industry remain bright. Airlines’ investments in improving the travel experience and the rise in travel numbers will fuel its long-term growth. This will be supported by a thriving economy that will further bolster travel demand.

Simply put, airline stocks are a popular choice for investors who can weather the short-term turbulence for long-term gains. 

Delta Airlines (DAL)

Delta Airlines (NYSE:DAL) is perhaps the most innovative of its airline peers. The company has made several strategic investments in the last couple of years, including the acquisition of Northwest Airlines to broaden its market share. More recently, Delta has positioned itself as America’s luxury airline with significant investments in its premium offering. The airline now offers more high-end seating options and recently unveiled its top-tier travel lounge, Delta One. 

These investments are in its efforts to help turn a profit which remains a work in progress. In its second-quarter earnings, Delta reported revenue of $16.7 billion, a 7% rise from the previous year. This was fueled by a 10% rise in premium revenue and the increase in corporate travel demand. However, net profit took a hit as a result of rising operating costs. Outlook also came in below expectations as Delta continues to navigate a challenging cost environment. 

But despite the mixed results, Delta remains one of the top airline stocks to buy now for two reasons. First, Delta’s expansive route network will help it capitalize on the boom in travel. Second, the airline’s premium travel offerings will eventually lower costs and improve profitability levels. These factors will help Delta weather the short-term headwinds and generate outsized long-term returns.

United Airlines (UAL)

United Airlines (NASDAQ:UAL) was among the hardest-hit stocks during the pandemic but has since seen a strong resurgence. The airline’s strong brand name and expansive route network with hubs in major cities are the key drivers behind its growth. And the recent financial figures reflect its successful comeback. 

Revenue in Q1 came in at $12.5 billion, a 9.7% rise from the prior year. Total capacity was up by 9% and the net loss was narrower than expected despite the $200 million impact from the grounding of the Boeing Max 9 aircraft. The impressive performance was largely the result of a resurgence in international travel, specifically in corporate travel. 

Looking ahead, United Airlines will report Q2 earnings estimated between $3.75 and $4.25 on July 18th. This is well above analyst estimates of $3.73 per share. While the optimistic forecast is reason enough to invest in the airline, UAL is also trading at a significant discount. With shares trading at just 4.3 times forward earnings, UAL’s current value offers major upside potential. 

The strong Q1 earnings and steady guidance make UAL one of the best airline stocks to buy now for bargain-hunting investors. 

American Airlines (AAL)

Airline stocks are typically known for their volatility and American Airlines (NASDAQ:AAL) is no different. AAL stock is down 20% this year and has underperformed the broader markets in recent years. This was the result of a weak earnings outlook as the company struggled to remain competitive in a high-cost environment. However, the dip presents a good buying opportunity because AAL is currently undervalued with much of the negativity priced in. 

Looking at Q1 results, American Airlines reported revenue of $12.6 billion, up 3.12% from the prior year. The company also remains liquid with $2.2 billion in free cash flow (FCF) and lowered debt by $950 million. It achieved nearly $12 billion of its $15 billion debt reduction goal by 2025. AAL also expects to grow its capacity by 3.5% in the second half of the year. However, the company forecasts revenue per available seat to fall by 5% to 6% versus the anticipated 1% to 2% drop. 

Overall, the results are certainly a mixed bag but AAL stock is still a worthy investment for the long haul. The short-term headwinds such as a competitive market environment and rising fuel prices will eat into profits. But on the flip side, rising capacity rates and low debt levels will lift the stock in the long haul.

AAL is flying into short-term headwinds but it remains one of the best airline stocks to buy now for risk-friendly investors seeking long-term returns. 

On the date of publication, Divya Premkumar 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.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.