Stanley Druckenmiller Bets Big on Airline Stocks – Should You?

Key Points

• Stanley Druckenmiller decided to sell some of the big tech names in his portfolio to replace them with airline stocks today. What was his motive?
• Investors have his three picks, plus an honorable mention to consider for the coming month.
• Wall Street analysts see a double-digit upside ahead for them.

Warren Buffett has always critiqued airline stocks for being overly capital-intensive, exhibiting low growth, and relying heavily on cyclical consumer travel patterns—further hampered by unions that limit the adoption of technology and automation. Overall, investors can assume that the value investor sees no reason to ever own an airline stock, but that doesn’t mean they can’t be traded.

Stanley Druckenmiller, from Duquesne Capital, has a 30-year track record with average annual returns of 30%, which is up there with the much longer record generated by Buffett. However, this one was made using a completely different strategy. Druckenmiller is more of a global macro trader, not looking at stocks from a perspective over six or nine months.

Over the past quarter, data shows that he’s decided to leave some of the technology sector growth names, like Microsoft Inc. NASDAQ: MSFT, and replace this liquid capital with holdings in airline stocks. His picks were Delta Airlines Inc. NYSE: DAL, United Airlines Holdings Inc. NASDAQ: UAL, and even American Airlines Group Inc. NASDAQ: AAL. Investors will see some trends behind this decision, with another honorable mention to consider today.

Record Travel Numbers Set Up a Great Quarter

Over the past quarter, the Transportation Security Administration (TSA) reported a record number of travelers in December 2024, reaching a high of just under 3.1 million in a single day. Considering that the earnings and revenue generated during this period will be reflected in the second quarter of 2025, Druckenmiller might be setting up for a potential uptrend.

He might not be the only one looking to this theme, as up to $13 million of institutional capital decided to invest in the U.S. Global Jets ETF NYSEARCA: JETS to seek exposure to a broader base of air travel names, such as the airlines mentioned in today’s list.

Whether Druckenmiller is betting on this continuing travel strength or on expanding margins as oil prices remain compressed in today’s market, the stage is set for these names to deliver a potential double-digit run across the board for investors.

Can American Airlines Take Off? Analysts Bet on a Breakout

American Airlines was Druckenmiller’s smallest position, but that doesn’t diminish the upside that some Wall Street analysts see in the stock.

Analysts from Raymond James decided to keep an Outperform rating on American Airlines stock as of January 2025, this time valuing it at $24 per share.

This new target would not only call for the stock to hit a new 52-week high but also calls for a net upside of as much as 58% from where it trades today. Considering that the stock now sits at 80% of its 52-week high, there is plenty of room for those looking at a stock that has potentially priced in a bearish case already.

United Airlines Joins the List of 2025’s Top Bullish Picks

More recently, some analysts were looking to stand out from the pack on Wall Street. Those from Susquehanna placed a Positive rating on United Airlines stock, this time pushing their price targets to a high of $130 per share.

As bullish as this call is, it still doesn’t come close to the $165 valuation placed by TD Cowen analysts in January 2025.

Both views call for United Airlines to make a new 52-week high, like in American Airlines’ call. They also include an implied rally of as much as 72% from where it trades today.

Institutional Investors Are Betting Big on Delta Airlines

This premium airline carrier caught Druckenmiller’s attention as well, and it’s the leader of the pack by trading at 86% of its 52-week high today. Due to this momentum, analysts at TD Cowen felt comfortable boosting the stock’s price target to a high of $90 per share as of January 2025, along with a Buy rating.

With a net upside of 50% from today’s price and more institutional buying from those at Castle Hook Partners LP, who decided to boost their Delta Airlines holdings by 27.4% as of February 2025 to get them a stake as high as $287.2 million today, Delta Airlines is a name investors should not pass up in their consideration for airline stocks.

Despite Being Overlooked by Druckenmiller, LUV Has Serious Upside

Southwest Airlines Co. NYSE: LUV is arguably one of the most—if not the most—profitable airlines in the United States, though its routes focus mostly on regional and domestic travel, which might have been the cutoff factor for Druckenmiller to consider it.

However, investors can consider it today as Wall Street analysts forecast up to $0.85 in earnings per share (EPS) for the company during the second quarter of 2025. This forecast implies a net growth rate of as much as 51.2% from today’s $0.56 in EPS.

Considering that stock prices are typically driven by EPS growth, Southwest Airlines is a potential breakout name in this dynamic. That is why the market is willing to pay a much higher 41.4x price-to-earnings (P/E) ratio for it, compared to the average 8.7x P/E valuation for the airline industry.