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Over the past two months, the financial state of the commercial airline industry has changed rapidly. At the start of the year, airlines were boasting some of the best financial performances on record, with signs of further growth continuing to build. Statistically, the commercial aviation industry, as defined by a value-weighted index of airline stocks created by Yahoo Finance, outperformed the broader S&P 500 Index over a six-year investment horizon by around 50%.
Delta Air Lines was posting record-breaking revenue figures, and CEO Ed Bastian said he expected 2025 to be Delta's most profitable year on record. This level of market optimism led share prices to soar. By January 21st, the airline industry was outperforming the market by nearly 60%.
The optimism wasn't limited to Delta. United Airlines CEO Scott Kirby also told shareholders that his company had big plans for 2025 and aimed to rival Delta as America's most profitable airline. Historically, investors avoided airline stocks due to their volatility; however, recent conversations suggested that long-term investments in airlines could be profitable.
