These aviation stocks look ready for takeoff

Cheaper jet fuel, robust demand and strong economic performance in key markets have the aviation industry booming again.

Vikram Barhat 11 February, 2016 | 6:00PM

Geopolitical events, poor economy and a weak dollar have buffeted the aviation sector for years. However, the precipitous drop in oil prices that sent many industries reeling has served to correct the course and cash flow for the airlines and related industries.

In addition to cheaper jet fuel, robust demand for passenger travel and strong economic performance in key markets have got the aviation industry booming again. The International Air Transport Association (IATA) recently forecasted aviation industry profits to grow from US$33 billion in 2015 to US36.3 billion dollars this year, generating an average net profit margin of 5.1%.

However, the industry's stock market performance is clearly trailing the earnings growth of its constituents. The Dow Jones U.S. Airlines Index is down nearly 18% year over year, as of Feb. 2, 2016. The S&P Composite 1500 Airlines Sub Index has lost more than 16% while the NYSE Arca Airline Index has fallen nearly 25% since this time last year.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Boeing Co178.44 USD2.98
Bombardier Inc0.44 CAD2.35
Embraer SA ADR6.06 USD2.19
Southwest Airlines Co33.22 USD5.23
United Technologies Corp59.64 USD2.63

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a freelance writer.

© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies