Sky-High Opportunities: 2 Airlines to Watch in 2025

Key Points

• The year's second half has seen a stunning recovery by the airline industry. 
• Shares of American Airlines have gained nearly 100% in recent months, and analysts are calling for even more gains.
• It’s a similar story to Delta Airlines, whose shares hit a fresh all-time high just last week. 

As we head into the final few weeks of the year, it’s a good time to think about the industries and stocks that are looking likely to do well in 2025. One such industry that is starting to gather momentum is the airline industry. 

After a somewhat volatile first half of the year, airline stocks in general, as seen in the US Global Jets ETF NYSEARCA: JETS, are on track to finish the year on the front foot. The ETF is up more than 50% since August, and while it’s not quite at 2021’s level yet, it’s almost within touching distance of its post-pandemic high. 

The good news for investors is that the global airline industry is expected to have a record-breaking 2025, with profits and passenger numbers projected to soar to new heights. According to the International Air Transport Association (IATA), revenues are set to surpass $1 trillion for the first time, fueled by robust demand in both passenger and cargo markets. Analysts expect airline profits to jump across the board despite lingering challenges like supply chain disruptions and rising costs. 

Passenger growth is a major driver of this momentum, with forecasts showing an almost 7% year-on-year increase, while air cargo revenues are also expected to do well. Margins have been improved thanks to cost controls, lower oil prices, and strong demand for premium and corporate travel, and these trends are expected to continue into 2025. Let’s jump into 2 airline stocks in particular that are worth looking at.

American Airlines Stock Targets 30% Upside from Current Levels

Since coming close to an all-time low at the start of August, shares of American Airlines Group, Inc. NASDAQ: AAL have effectively gone only one direction: up. The stock gained almost 100% in just four months, a stunning reversal for a company many investors wrote off before the summer. 

Much of the recovery has centered around a return to year-over-year revenue growth, with this year seeing American Airlines land its highest-ever quarterly revenue print. Understandably, the stock has done well, and there are plenty of reasons to think this will continue. 

Having already garnered the affection of many analysts with bullish ratings in recent weeks, Tuesday saw the team over at Bernstein upgrade their rating on American Airlines from Market Perform to Outperform while giving the stock a fresh $24 price target. This was echoed on Wednesday morning by Morgan Stanley, who reiterated their Overweight rating and also boosted their price target. 

From the $17 American Airlines shares were trading at on the morning of Dec. 11, that’s pointing to a targeted upside of more than 30%. 

Delta Air Lines Eyes Record Close After Roller-Coaster Year

Like American, Delta Air Lines, Inc. NYSE: DAL shares have also been on a roller coaster this year. However, they look set to finish at a literal high, with this month already seeing them hit a record. As part of a broad, bullish stance on the airline industry overall, the UBS Group team recently initiated Delta Air Lines coverage with a Buy rating. This was in line with similarly bullish updates from Citigroup, Goldman Sachs, and Barclays last month.

UBS is particularly bullish on the company’s revenue streams, strong balance sheet, and record of profitability. With 2025 set to be a record year for passenger numbers, Delta is starting from a particularly strong position. 

The team's price target of $88 says it all, as it points to a targeted upside of 40% from current levels. It's worth noting that while shares of American Airlines have been setting high after high in recent weeks, shares of Delta are definitely looking a little deflated, having spent the past month consolidating and trading sideways.

However, the fact they managed a record close last week speaks to the underlying demand for their shares, and it’s understandable they may just want to take a breather. Investors should look for the stock to close above $67, as this will all but confirm the rally is back on and the uptrend is intact.