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The 3 Hottest Airline Stocks to Consider Before Summer Travel

Travel demand is accelerating, with major names in the sector reporting strong demand ahead of the key holiday period, highlighting the buying potential for airline stocks ahead of summer. Last week, Booking.com said it expected strong travel demand despite the slowdown in some regions, including the Middle East.

Booking.com said it expects growth in room nights to increase between 4% and 6% year-over-year. Additionally, gross travel bookings are expected to increase by 3-5%. Overall, the company’s first quarter results indicate strong demand, especially in Europe, which is the key market for this company.

According to the Airports Council International (ACI) Worldwide, global air passenger volume is now close to pre-pandemic levels. The first biannual update of 2024 air travel demand indicates that the current projection for global passenger volume in 2023 stands at approximately 8.7 billion.

This figure represents 95% of the 2019 level, representing a 31% year-over-year growth compared to the volume recorded in 2022. Estimates provided by ACI World are based on comprehensive data drawn from more than 2,600 airports in more than 180 countries and territories. .

According to global airport traffic forecasts (WATF) 2023-2052, the baseline scenario before the COVID-19 pandemic estimated that global passenger volume would reach 10.5 billion in 2023, or 119% of the 2019 level. However, the current projection falls short of this scenario pre-COVID-19 benchmark, but it nevertheless shows a significant recovery.

As of October 2023, total passenger traffic had increased by 28% year-on-year, reaching 93% of the cumulative level of October 2019. The domestic market saw an increase of 21% compared to the previous year, reaching 97%. figures from 2019, while the international market led the recovery with growth of 38% year-on-year, reaching 88% of the 2019 level.

Looking ahead, global passenger traffic in 2024 is expected to surpass 2019 figures for the first time since the start of COVID-19. The forecast calls for a total of 9.7 billion passengers, or 106% of the 2019 level, with a year-on-year growth rate of 12%. However, the growth rate is expected to slow in the coming years as the market stabilizes from the impact of the pandemic.

Here we take a look at the three hottest airline stocks to buy ahead of the summer season.

Booking.com (BKNG)

a person opens Booking.com on a smartphone

Source: Denys Prykhodov / Shutterstock.com

Reservation.com (NASDAQ:BKNG) is a leading online travel agency known for offering a wide range of travel services, including accommodation, flights, car rentals and restaurant reservations.

89% of the company’s total revenue comes from travel outside the United States, making it one of the biggest beneficiaries of the strong demand for international travel. Booking.com reported that room nights booked in the three months ending March 31 rose 9% to 297 million, beating analysts’ expectations.

Gross travel bookings reached $43.5 billion, also beating projections, as did the company’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $898 million, well above the expected $718.6 million.

Adjusted earnings per share were reported at $20.39, compared to analysts’ estimates of $13.98. Additionally, the board declared a cash dividend of $8.75 per share, payable June 28.

Shares of Booking Holdings rose 5.3%, climbing to $3,657.09 from a previous close of $3,472.91 after analysts raised their price targets, reflecting renewed confidence in growth prospects of the company.

Booking.com stock is up 9% year to date.

Ryanair (RYAAY)

Image of a pilot exiting a large white, blue and yellow Ryanair plane.

Source: Shutterstock

Ryanair (NASDAQ:RYAY), a major low-cost airline based in Ireland, specializing in budget travel across Europe and to selected international destinations. Known for its cost-effective pricing model, Ryanair makes international travel easier by connecting an extensive network of routes, making it a popular choice for travelers looking for affordable options. As such, it stands out as one of the top airline stocks to buy heading into summer.

Ryanair recently announced a significant expansion plan which will introduce 169 new routes, expanding its network to a total of 2,600 routes across Europe and North Africa, positioning itself as a key player in the industry world travel.

This growth strategy includes the launch of domestic operations in Morocco, where the airline will connect 11 different destinations. As the aviation industry faces reduced schedules due to ongoing Pratt & Whitney engine problems affecting several major airlines, Ryanair expects sustained demand for air travel.

MakeMyTrip (MMYT)

MakeMyTrip (MMYT) – Airline Stocks to Buy Before SummerMakeMyTrip (MMYT) – Airline Stocks to Buy Before Summer

MakeMyTravel (NASDAQ:MMYT) is an Indian online travel company offering travel products and solutions. Founded in 2000, it offers services such as flight tickets, domestic and international vacation packages, hotel reservations, and train and bus tickets, making it a comprehensive travel portal in the travel market. fast growing travel in India.

A few months ago, MakeMyTrip reported unprecedented quarterly gross bookings, revenue and net profit for its fiscal third quarter. The company’s net income soared to $24.2 million, a massive increase from the $0.2 million reported in the same quarter last fiscal year.

Revenue according to International Financial Reporting Standards (IFRS) climbed 26.9% in constant currencies to $214.2 million, compared to $170.5 million in the same period last year. The operating level saw EBITDA, which represents earnings before interest, taxes, depreciation and amortization, jump 105.6% to $29.4 million, compared to $14.3 million in the corresponding quarter of the last year.

Gross bookings for MakeMyTrip saw a year-over-year increase of 21.7% in constant currency, reaching $2.088 billion in the third quarter of the current fiscal year, compared to $1.738 billion in the same quarter of the previous financial year.

As of the date of publication, Shane Neagle did not hold (directly or indirectly) any positions in any securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com’s publishing guidelines.

Shane Neagle is fascinated by how technology is poised to disrupt investing. He specializes in fundamental analysis and growth investing.