The Sunday after Thanksgiving is usually one of the busiest travel days of the year, which bodes well for the best airline stocks. On that day in 2021, 2,451,300 travelers passed through TSA. This is up approximately 208% from 1,176,091 travelers in 2020. But, it’s still down about 15% from 2,882,915 travelers in 2019.

According to these numbers, travel has still not returned to pre-pandemic levels. However, the threat of COVID-19 is slowly fading as more of the population gets vaccinated. Due to this, many investors are researching a few of the best airline stocks to add to their portfolios. This is because airline stocks could perform well in the coming months if travel continues to return to normal levels.

The airline industry usually moves with economic cycles. Over the past few years, these cycles have been more pronounced than ever. Airline stocks have gotten slammed due to quarantines and travel restrictions. In 2020, COVID-19 shut down travel almost entirely. Now, thanks to the vaccine, it finally looks like there are clear skies ahead.

This article will take a look at the best airline stocks to buy in 2022.

COVID-19 Continues to Cause Issues for Airlines

The WHO recently discovered a new variant of COVID-19 in November 2021. Later that month, it deemed the Omicron Variant a “variant of concern”. This coronavirus variant started in South Africa. It spread rapidly throughout the world, causing another spike in cases. Although the initial spike from Omicron has died down, sub-variants are causing other small spikes. However, the NIH is optimistic that the vaccines will work against this variant and its sub-variants.

We currently live in a world where markets respond rapidly to any news related to COVID-19. The full story on the Omicron variant is still developing. If you are researching the best airline stocks to buy then I’d recommend finding the most up-to-date information on this variant and other new variants. If they present no serious threat then airlines have nothing to worry about. However, if the variants pose a threat then airline stocks could take a longer time to experience gains.

Best Airline Stocks to Buy In 2022

The United States airline industry is an oligopoly. This means that the bulk of the industry is controlled by just a few companies. In fact, 80% of domestic airline travel goes through only four airlines. These companies are Southwest, American, Delta, and United. These airlines offer more or less the same service with slightly different perks. This can sometimes make it difficult to determine which airline has a leg up over the others.

In general, the most lucrative part of the airline business is business and international travel. Over the long run, the airlines that win these categories will have a higher chance of being profitable. The following airline stocks were selected based on their performance in these categories.

Now let’s take a look at some of the best airline stocks to buy going forward in 2022.

U.S. Global Jets (NYSE: JETS)

Exchange-Traded Funds (ETFs) are a great way to diversify your portfolio. The U.S. Global Jets ETF owns a few different airline stocks. This reduces the pressure of picking just one or two individual airline stocks. It also helps you diversify your money. It does this by spreading your money among a few of the best airline stocks. This way, if one stock crashes, the rest of your money is protected.

The U.S. Global Jets ETF owns over 50 airline stocks. Its biggest holdings are Southwest, American, United and Delta. This ETF will rise or fall depending on the movement of the overall airline industry.

The U.S. Global Jets ETF’s price is down 22% so far in 2022. It’s also down 45% over the past five years.

If buying an ETF doesn’t appeal to you then let’s take a look at the individual best airline stock to buy in Q3 2022.

Southwest Airlines (NYSE: LUV)

In general, I consider Southwest Airlines one of the best airline stocks you can buy. This airline has a track record of profitability. It was also the first airline to report a profit after the COVID-19 pandemic. This is most likely because Southwest boasts a profit margin of approximately 10% (in non-pandemic years). This profit margin is almost double most other airlines. This extra profitability gives Southwest a buffer when the rest of the industry is experiencing turbulence.

Southwest Airlines also seems to be one of the few airlines that is generally liked by passengers. This is most likely because of its long list of small perks. Travelers flying Southwest enjoy two checked bags, no fees to change or cancel a flight, and freedom to pick your seat. Thanks to these perks, Southwest usually gets away with charging slightly more per flight. This then leads to a higher profit margin.

Southwest stock is down 15% so far in 2022. It’s also down 38% over the past five years.

Delta Airlines (NYSE: DAL)

Business travel has lagged significantly behind leisure travel in the United States. Right now, travelers are willing to fly home for the holidays but still prefer to hold business meetings over Zoom. However, over the long run, business travel will most likely return to normal levels. When that happens, Delta will be in a good position to capitalize.

Delta is generally considered one of the best airline stocks for business travel. Business-class Delta tickets offer several bonuses. In addition to these bonuses and very comfortable flights, Delta has the Skybonus Rewards Program. This is a corporate rewards program that allows companies to earn points for flying with Delta Airlines and its partners.

Delta’s stock is down 21% so far in 2022. It’s also down 39% over the past five years.

American Airlines (Nasdaq: AAL)

American Airlines is the industry leader in terms of network size. This makes it one of the best airline stocks to buy for international travel. Just like travel for business, international travel is nowhere near pre-pandemic levels. However, it’s expected to ramp up in 2022 and beyond. The exact timeline will depend on the Omicron sub-variants and other COVI9-19 variants.

American Airlines offers flights to 364 destinations around the world. This includes 126 international destinations in 64 countries. It also created the Northeast Alliance by partnering with JetBlue. A network of this size provides tons of options and flexibility for travelers. So, it’s no surprise that American also has an incredibly popular frequent flier program. Travelers generally consider the AAdvantage rewards program one of the best in the industry.

American Airlines’ stock is down 29% so far in 2022. It’s also down 73% over the past five years.

Investing in Airline Stocks

The airline industry has been hit particularly hard by the pandemic, but with life “returning to normal”, it’s poised to make a comeback as travel increases.

I hope that you’ve found this article valuable when it comes to learning a few of the best airline stocks to buy. As usual, please base all investment decisions on your own due diligence and risk tolerance.