A new perspective on airline stock investment: 2025 global airline travel recovery driving stock selection opportunities

Global Aviation Industry Outlook: Why Now Is the Time to Pay Attention

After experiencing severe impacts from the pandemic, the aviation industry began to recover profitability in 2023. The International Air Transport Association (IATA) estimates that by 2025, global passenger numbers will officially surpass pre-pandemic levels. Even more notably, by 2040, demand for air travel is projected to double, increasing from 4 billion to approximately 8 billion passengers, with an average annual growth rate of 3.4%.

This long-term demand recovery has attracted the attention of top investors. Even Warren Buffett, who has traditionally been cautious, has established significant holdings in Delta Air Lines (DAL), American Airlines (AAL), and United Airlines (UAL). Wall Street analysts are also upgrading airline stock ratings; Morgan Stanley has even upgraded American Airlines from equal weight to overweight, with a target price increase of over 35%.

Basic Understanding of Airline Stocks: Classification and Operating Logic

The Two Main Camps of Airline Stocks

“Airline stocks” refer to shares issued by publicly listed airlines on stock exchanges. They can be categorized into two types based on corporate nature:

State-Owned Airline Stocks: Managed and operated under government-led structures. They tend to be relatively stable internally, less prone to sudden crises, attracting conservative investors. Taiwan’s EVA Airways is an example of this, and in the Hong Kong market, China Eastern Airlines and China Southern Airlines also exhibit state-owned characteristics.

Private Airline Stocks: Owned and operated by private investors or companies, with more frequent changes in ownership. US airlines like Southwest Airlines and United Airlines, as well as Chinese carriers Spring Airlines and Juneyao Airlines, fall into this category, often offering greater growth flexibility.

The Three Core Factors Driving Airline Stock Prices

Airline performance is closely linked to macroeconomic fundamentals, reflected in three key areas:

Global Economic Cycles: During recessions, consumers reduce discretionary spending (including travel), leading to decreased disposable income and shrinking airline demand; during expansions, increased travel expenditure boosts airline revenues. The COVID-19 pandemic vividly demonstrated the significant impact of global economic shocks on air travel demand.

Oil Price Fluctuations: Fuel costs constitute a large portion of airline expenses. Rising oil prices force airlines to raise ticket prices to offset costs, potentially suppressing demand; falling oil prices reduce costs, benefiting profit margins.

Interest Rate Environment and Financing Costs: The airline industry is capital-intensive, requiring substantial investment in fleet acquisition and infrastructure. Rising interest rates increase borrowing costs, discouraging capital expenditure; declining rates stimulate investment and expansion.

As a result, airline profitability is often difficult to sustain, requiring continuous balancing amid fierce competition, labor costs, and fuel price volatility.

US Airline Stocks: Opportunities in the Three Major Giants

Delta Air Lines (DAL): Advantages of a Stable Business Class

Delta Air Lines, headquartered in Atlanta, Georgia, was founded in 1924 and has grown into an international airline giant covering six continents and over 1,000 destinations. The company has a high proportion of business travelers and international routes, and has established cost advantages through maintenance, leasing, and fuel hedging.

As of November 13, 2025, Delta’s stock price is approximately $60.48, with a year-to-date increase of +69.51%, despite a recent pullback of about -3.86% in the past month. Its market capitalization is around $39.3 billion, with a P/E ratio of 8.52. This recent volatility suits investors willing to tolerate higher fluctuations and also reflects market confidence in its long-term prospects.

Copa Holdings (CPA): Growth Momentum in Latin America

Copa Holdings dominates the Latin American market through its subsidiaries Copa Airlines and AeroRepública. As disposable income in Latin America rises and urbanization accelerates, the region’s air travel growth prospects are promising. Copa uses Panama City as a hub, offering an average of 327 flights daily to 78 destinations in 32 countries.

In Q2 2025, its financial performance was impressive: net profit of $149 million, EPS of $3.61, a 25% YoY increase; cash and investments totaling $1.4 billion, accounting for 39% of revenue over the past 12 months, demonstrating strong financial flexibility. Operationally, it maintained a high on-time rate of 91.5%, a flight completion rate of 99.8%, and reduced unit operating costs by 4.6% YoY to 8.5 cents. It has been recognized as the best airline in Central America and the Caribbean for ten consecutive years by Skytrax.

As of November 13, CPA’s stock price has boosted its market value to $5.23 billion, with a 4.28% increase in the past month, and a P/E ratio of 8.27.

Ryanair (RYAAY): Leading Low-Cost Carrier in Europe

Ryanair Holdings, headquartered in Ireland, was established in 1985 and is renowned for low fares and high operational efficiency, making it a global leader in low-cost airlines. Its brands include Ryanair and Buzz, with a fleet of over 640 aircraft, operating in 36 countries and 224 airports, with about 3,600 flights daily, transporting 207 million passengers annually.

The company has ordered 300 new Boeing 737 aircraft, planning to increase annual passenger volume to 300 million by 2034. As of the close on November 13, 2025, its stock price is $64.61, with a total market cap of $34.317 billion, slightly down 0.49% that day but maintaining solid fundamentals. During the winter season, it added three aircraft based in Milan, investing $3.1 billion, opening five new routes, and increasing frequency on 40 popular routes, expecting to transport 19 million passengers annually, a 4% YoY growth.

Taiwan Airline Stocks: Comparing Local Leaders and New Entrants

EVA Airways (2681): A Five-Star International Brand

EVA Airways, established in 1989, is one of Taiwan’s two major airlines. As a Skytrax five-star airline, its fleet includes Boeing 787 Dreamliners and A350s, serving over 60 international destinations across Asia, Europe, North America, and Oceania. The company offers multi-tier services such as Royal Laurel Class and Premium Economy, and operates a dedicated cargo business, with plans in 2025 to upgrade three Boeing 777-300ER passenger aircraft to freighters.

As of November 13, its stock price remains at NT$37.2, with a total market cap of about NT$186 billion. Analysts expect it to reach NT$37.84 by year-end. In Q3, passenger load factor was as high as 92.5% (93.5% domestically), with international capacity up 28% YoY. The company is expanding its route network, with new Boeing 787s deployed on routes to Brisbane and Vancoucer.

China Airlines (2610): Multi-Brand Strategy

Founded in 1959, China Airlines is Taiwan’s oldest airline, operating under a full-service and low-cost dual-brand strategy with subsidiaries China Trust Airlines and Tigerair Taiwan. Its fleet comprises 83 aircraft (including 65 passenger and 18 cargo planes), with over 1,400 weekly flights.

As of November 13, its stock price is NT$28.6, with a total market cap of about NT$162 billion. In Q3, passenger load factor reached 86.9% (up 4.4 percentage points from 2019), with international capacity up 13% YoY. Investors are optimistic about its long-haul route expansion and valuation recovery potential.

Starlux Airlines (2646): High-Growth Potential of a New Full-Service Carrier

Starlux Airlines is a new Taiwanese full-service airline that has rapidly expanded in Asia and North America since commencing operations in 2020. It emphasizes differentiated service and a young fleet to build competitiveness.

As of November 13, its stock price is NT$42.8, with a market cap exceeding NT$95 billion, an 18% increase from the start of the year. In Q3, passenger load factor was 85.9% (86.3% domestically), with international capacity up 10% YoY. The Taipei-California Ontario route launched in June has already reached 80% bookings. The company has ordered 10 Airbus A350-1000 flagship aircraft at the Paris Air Show, planning to deploy them on new routes to Phoenix and other destinations, and has added the Taichung-Kobe route to further improve its Northeast Asian network.

Investment Strategies and Risk Management for Airline Stocks

Choosing Between Traditional Brokers and CFDs

There are two main ways to invest in airline stocks. The first is to open an account with a broker and buy directly; for Taiwan stocks, this can be done through domestic brokers, while US and Hong Kong stocks require overseas brokers or via cross-border entrusted trading (which incurs higher fees).

The second is to invest via Contracts for Difference (CFD). Compared to brokers, CFDs offer unlimited long/short positions, no trading commissions, and high leverage. For high-risk investors or short-term traders, CFDs can enhance capital efficiency under proper risk management.

Advantages and Limitations of Airline Stocks

Investment advantages include: high elasticity of growth during travel demand recovery, market monopoly advantages for large airlines, diversified revenue streams (baggage fees, seat upgrades, mileage programs, cargo), and some stocks offering dividend yields.

Main risks involve: high cost structures (fuel, labor, maintenance), difficulty reducing costs during downturns; high debt and capital expenditure pressures on cash flow; and susceptibility to black swan events (oil price spikes, geopolitical crises, pandemics), leading to high volatility.

Stock Selection Strategies for Airline Stocks: Timing Cycles and Diversification

Identifying Cycle Turning Points

Airline stocks are cyclical, following boom and bust patterns. The best time to buy is near the end of a cycle, when airlines have accumulated significant profits and are better prepared for the next downturn.

Implementing Regional Diversification

Since airline stocks are linked to the overall health of the global economy, diversifying investments across different regions (such as US, Taiwan, Hong Kong markets) can effectively reduce risks associated with a single market.

Prioritize Companies with Strong Cash Flows

The capital-intensive nature of the airline industry makes cash reserves crucial. Investing in airlines with healthy cash flow ensures their ability to survive prolonged downturns. The aforementioned EVA Airways, China Airlines, Starlux Airlines, Delta Air Lines, and Copa Airlines all demonstrate sound financial health and cash management, making them worthy of attention.