2025 Aviation Stock Investment Landscape: Which is the Worthy Leader in Taiwan and the US Airlines? A Comprehensive Analysis of the Prospects and Risks of the Aviation Industry

Why Are Airline Stocks a Barometer for Economic Recovery?

The airline industry is regarded as an economic barometer, with its ups and downs closely linked to global economic conditions. When air travel is booming, the industry demonstrates remarkable growth resilience; but during external shocks, airlines are among the most vulnerable victims.

According to estimates by the International Air Transport Association (IATA), global passenger numbers will surpass pre-pandemic levels for the first time in 2025. Even more optimistically, by 2040, demand for air travel is expected to double, increasing from 4 billion to approximately 8 billion passenger trips, with an average annual growth rate of 3.4%. This long-term growth outlook provides solid fundamental support for airline stocks.

Even Warren Buffett, who has traditionally been cautious about the airline industry, has changed his stance. His Berkshire Hathaway has significantly increased holdings in targets such as Delta Air Lines (DAL), American Airlines (AAL), and United Airlines (UAL), reflecting a reevaluation of the industry’s prospects.

The Nature of Airline Stocks: State-Owned vs. Private Investment Logic

Airline stocks can be categorized based on ownership structure:

State-Owned Airlines (Government-backed): These have relatively stable internal governance, with shareholders and management appointed by the government, making internal crises less likely. This type of stock suits conservative investors seeking stable profits, such as Taiwan’s Evergreen Airlines and China Airlines. Hong Kong-listed China Eastern Airlines and China Southern Airlines also fall into this category, with their stock performance often reflecting the stability of state-controlled enterprises.

Private Airlines: Controlled by private capital, their ownership structures are more flexible, and their operational strategies are more adaptable. Examples include Southwest Airlines and United Airlines in the US, Ryanair in Europe, and Spring Airlines and Juneyao Airlines in China. Private airlines generally have advantages in cost control and innovative services.

Three Major Economic Variables Driving Airline Stock Fluctuations

1. Direct Impact of Global Economic Conditions

Air travel is essentially a discretionary expense. When the economy expands and incomes rise, consumers are more willing to spend on travel; conversely, during recessions, travel expenditures are among the first to be cut. The COVID-19 pandemic vividly demonstrated how economic shocks can devastate airline demand, but also showed the potential for strong rebounds during recovery.

2. Oil Price Fluctuations as a Core Cost Threat

Fuel costs constitute the largest portion of airline operating expenses. When oil prices surge, airlines may raise ticket prices to pass on costs or face squeezed profit margins. Conversely, falling oil prices provide relief, enabling airlines to lower fares and stimulate demand.

3. Interest Rate Environment’s Deep Impact on Financing Capabilities

The airline industry is capital-intensive; aircraft procurement and terminal expansions require substantial capital. Rising interest rates increase financing costs, limiting expansion plans; falling rates ease debt burdens and encourage investment and growth.

Because these factors interact and constrain each other, the airline industry has historically struggled to maintain stable profit margins. Fierce competition, demand volatility, labor shortages and strikes, and fuel price swings force airline decision-makers to continually adjust strategies, balancing cost-cutting and revenue growth.

US Airline Stock Ecosystem: Comparing the Three Major Giants

Delta Air Lines (DAL)

Delta is one of the world’s top airline operators, headquartered in Atlanta, Georgia, with a history dating back to 1924. Over a century of development, it now covers six continents and over 1,000 destinations, making it a leader among the US Big Four carriers.

Competitive Advantages: Higher proportion of business travelers and international routes, leading to higher fare revenue; cost control advantages in maintenance, fleet leasing, and self-produced fuel. Morgan Stanley has thus designated Delta as a preferred target.

Recent Performance: Since 2025, stock price has increased approximately 69.51%, but has pulled back 3.86% in the past month to $60.48. Volatility is relatively high, suitable for investors with higher risk tolerance.

Copa Holdings (CPA)

As the regional leader in Latin America, Copa Airlines operates through subsidiaries Copa Airlines and AeroRepública, with hubs in Panama City. As disposable income and urbanization increase in Latin America, demand for air travel continues to grow.

Performance Highlights: In Q2 2025, net profit reached $149 million, with EPS of $3.61, up 25% YoY. Cash and investments total $1.4 billion, accounting for 39% of revenue over the past 12 months, indicating strong financial flexibility. Operational metrics are also robust—on-time rate 91.5%, flight completion rate 99.8%, and unit operating costs down 4.6% YoY to 8.5 cents, earning Skytrax’s Best Airline in Central America and the Caribbean for ten consecutive years.

Market Position: Operating 327 flights daily, connecting North, Central, and South America and the Caribbean to 78 destinations across 32 countries, forming an unshakable regional advantage.

Ryanair Holdings (RYAAY)

Ryanair is Europe’s largest airline group and a global low-cost carrier leader, headquartered in Ireland. Since its founding in 1985, it has been known for low fares and high operational efficiency.

Scale and Ambitions: Fleet exceeds 640 aircraft, covering 36 countries and 224 airports, with about 3,600 flights daily and 207 million passengers annually. The company has ordered 300 Boeing 737 new aircraft, planning to increase annual passenger volume to 300 million by 2034.

Recent Status: As of the close on November 13, stock price is $64.61, with a market cap of $34.317 billion. For winter 2025, it will add 3 aircraft at Milan, invest $3.1 billion to open 5 new routes, and increase 40 popular routes, transporting an estimated 19 million passengers, up 4% YoY.

Taiwan Airline Stock Market Overview: In-Depth Look at Three Targets

EVA Airways (2618)

EVA Airways is one of Taiwan’s two major airlines, established in 1989, known for Skytrax five-star certification and quality service. Its fleet includes modern aircraft like Boeing 787 and A350, serving over 60 international destinations across Asia, Europe, North America, and Oceania.

Operational Performance: In Q3 2025, passenger load factor reached 92.5%, with domestic at 93.5% and international ASK( available seat kilometers) increasing by 28% YoY. Long-haul routes to Europe and Southeast Asia continue to see high booking volumes.

Stock Price and Outlook: As of November 13, closing at NT$37.2, with a market cap of NT$186 billion. Analysts expect the full-year EPS to reach NT$37.84. The company is also upgrading cargo services, with three Boeing 777-300ER freighter conversions underway, and the new 787 fleet already in operation on routes like Brisbane, with plans to extend to Vancouver, further strengthening its Asia-Pacific leadership.

China Airlines (2610)

Founded in 1959, China Airlines is Taiwan’s oldest airline. Part of the SkyTeam alliance, it operates both full-service and low-cost subsidiaries (Mandarin Airlines and Tigerair Taiwan), forming a comprehensive market layout.

Operational Scale: Fleet of 83 aircraft (including 65 passenger and 18 cargo planes), with over 1,400 weekly flights. In Q3 2025, passenger load factor was 86.9%, up 4.4 percentage points from 2019. International ASK increased by 13%, with high booking levels on Northeast Asia and North America routes.

Market Valuation: As of November 13, stock price is NT$28.6, with a market cap of NT$162 billion. Institutional investors are optimistic about valuation recovery from long-haul route expansion. Long-term dividend attractiveness is also a key factor for conservative investors.

Starlux Airlines (2646)

Starlux Airlines is a new full-service Taiwanese carrier that rapidly expanded into Asian and North American routes after commencing operations in 2020. The company emphasizes differentiated service and modern fleet branding.

Growth Drivers: In Q3, passenger load factor was 85.9%, with domestic at 86.3% and international ASK up 10% YoY. The new Taipei—California Ontario route has an 80% booking rate, becoming a growth engine.

Market Performance: As of November 13, closing at NT$42.8, with a market cap exceeding NT$95 billion, an 18% increase from the start of the year, making it one of the best-performing growth stocks in the airline sector. Strategically, the company ordered 10 A350-1000 flagship aircraft at the Paris Air Show, deploying them to new destinations like Phoenix; in April, it added Taichung—Kobe route to enhance Northeast Asia network. Its young fleet and differentiated services are core competitive advantages.

The Double-Edged Nature of Airline Investment: Opportunities and Traps

Investment Appeal

1. Resilient Growth During Economic Upturns

Airline revenues depend directly on passenger volume. When international tourism recovers and business travel picks up, profits typically improve significantly. Past recovery phases (notably post-pandemic 2022–2024) have seen many airlines’ profits rebound rapidly, making them classic beneficiaries of economic recovery.

2. Stability of Oligopolistic Market Structure

Despite fierce competition, route resources, traffic rights, fleet size, and pilot qualifications are difficult to replicate quickly, giving large airlines clear advantages in their core markets. The Big Four US carriers nearly monopolize domestic long-haul and international hub routes, helping sustain long-term market position.

3. Diversification of Revenue Streams

Modern airlines no longer rely solely on ticket sales. Ancillary revenues such as baggage fees, seat upgrades, mileage programs, cargo, and co-branded credit cards are increasingly important. This diversification provides resilience during off-peak seasons and results in a more stable profit structure than surface indicators suggest.

4. Long-Term Dividend Appeal

Some financially sound airlines pay dividends during stable periods, such as Southwest Airlines in the US and certain European and Asian carriers. For cash-flow-focused investors, this offers an attractive income stream.

Investment Risks

1. High Cost Structure and Sensitivity to Economic Cycles

Fuel, labor, and maintenance are the three main cost pillars. Rising oil prices or labor shortages immediately impact performance. The cyclical nature of the industry means—good times see rising travel demand and stock prices, while downturns lead to reduced travel and falling stock prices. For novice investors, volatility may be higher than expected.

2. High Debt and Capital Expenditure Pressure

Aircraft, terminals, and equipment investments are substantial, and airlines tend to carry high debt levels. During economic downturns or rising interest rates, financial pressure intensifies. During the pandemic, many US airlines were forced to raise capital due to excessive debt, leading to significant share dilution.

3. Unpredictable Black Swan Events

Pandemics, geopolitical crises, weather disasters, and sudden airspace restrictions are external shocks most likely to hit the airline industry. These are often unpredictable but can have severe impacts, such as massive flight cancellations and passenger declines, causing stock prices to plummet.

Timing and Strategies for Airline Stock Investment

Capitalize on Economic Cycles for Entry

Airline stocks follow clear cyclical patterns. The best time to buy is usually near the end of a cycle but before the market fully reflects the recovery—when profits are solid but valuations are still reasonable. Historically, airlines earn most profits during economic expansion, but during slowdowns, demand drops and profit margins compress.

Diversify Geographically to Spread Risk

Airline stocks are linked to the health of the global economy. Diversifying investments across regions such as Taiwan, the US, and Europe can significantly reduce regional economic risks. For example, Taiwan’s airline stocks benefit from Asia-Pacific growth, while US and European carriers show different performance patterns depending on local cycles.

Focus on Companies with Strong Cash Flows

Given the capital-intensive nature of the industry, selecting airlines with ample cash reserves, manageable debt, and stable cash flow is crucial. These companies are better equipped to withstand long-term downturns and industry shocks.

Investment Approaches

Traditional stock investments can be made through brokerage accounts by entering stock codes. Taiwan airline stocks are traded directly via domestic brokers; US stocks require overseas broker accounts or via cross-trading (though with higher fees). For short-term leverage, CFD( trading offers no-commission, unlimited long/short options but requires strict risk management.

Outlook for Airline Investment from 2025 to 2040

The airline industry has recovered from the historic loss of $140 billion during the pandemic and has been profitable since 2023. IATA projects passenger numbers will surpass pre-pandemic levels in 2025, with demand doubling by 2040.

Major Wall Street analysts are optimistic about airline stocks. Morgan Stanley and other institutions have upgraded some carriers, citing high management quality, measurable growth, and fuel hedging strategies. The large-scale holdings by Buffett’s Berkshire Hathaway also reflect a professional revaluation of airline stocks.

Taiwan Airline Stock Analysis: Evergreen and China Airlines’ state-backed stability contrasts with Starlux’s rapid growth, representing market vitality. Compared to US airlines, which have larger economies of scale and market maturity, volatility and investment opportunities are greater. Investors should balance their risk preferences and time horizons between Taiwan’s stable stocks and US’s more flexible options.