With Donald Trump returning to the White House for a second term, significant changes are likely in the air transportation space. Airline stocks, already buoyed by upbeat passenger volumes, will likely gain further under the second Trump administration. Many market watchers expect the administration to create a supportive backdrop for the industry.
With brighter skies expected for airlines under Trump’s second shot at the U.S. presidency, we would advise investors interested in the Zacks Airline industry to bet on United Airlines UAL, American Airlines AAL, Delta Air Lines DAL and Southwest Airlines LUV right away for higher returns. Let’s delve deeper to explore the optimism surrounding airlines following Trump’s return to the White House.
Airline Bosses Signal Optimism Under Trump 2.0
Delta’s chief executive officer (CEO) Ed Bastian had said in November 2024, following Trump's victory in the U.S. presidential election over Kamala Harris, that the new administration’s policies are likely to be a “breath of fresh air” for airlines.
He expects Trump to take a fresh look at the prevalent regulatory environment and mitigate the government “overreach” under the Biden administration. The deregulation policies evident during Trump’s first term were in line with airline executives' demands for reduced oversight and greater business flexibility.
LUV’s CEO Robert Jordan also spoke on similar lines. He, too, hopes that the new administration’s stance will be more business-friendly. He expects the Department of Transportation (“DOT”) to be less aggressive in terms of “regulating or rule-making.” In fact, Trump has made it amply clear that he intends to reduce regulation at the federal level, with air transportation being no exception.
Willie Walsh, director general of the International Air Transport Association, expects the Trump era to be “a net positive” for the industry amid geopolitical challenges.
Reduction in Consumer Protection Initiatives Likely
Under the Biden administration, airlines were compelled to upgrade their systems to comply with new requirements due to policies mandating automatic cash compensation for delays and cancellations. This mandate naturally increased the cost burden on airlines. Such rules may be relaxed under Trump’s administration.
During Trump’s first stint as U.S. president, there were efforts to reduce consumer protection regulations used by the DOT. We expect similar efforts in Trump’s current stint. Regulations like the requirement of new disclosures of fees for airline ancillary services, such as premium seating, WiFi and lounge access, may be done away with.
Sean Duffy, who is Trump’s pick for the post of DOT secretary, intends to do away with policies pertaining to diversity, equity and inclusion or DEI for pilots and air traffic controllers, both of which face staffing shortages, as part of Duffy’s endeavor to promote safe flying.
Trump has already issued an executive order directing the Federal Aviation Administration to “return to non-discriminatory, merit-based hiring” and eliminate DEI initiatives.
M&A Activity Might Increase Under Trump
Under Trump, efforts pertaining to joint ventures, mergers, and/or acquisitions by smaller airlines to compete more effectively with the larger U.S. airlines may receive more support. The request for information, introduced by the Biden administration, for seeking comments on the state of competition in the airline industry, including the effects of mergers, may be withdrawn or re-shaped by Trump.
We remind investors that during the Biden era, JetBlue Airway’s JBLU bid to takeover Spirit Airlines was blocked by a federal judge. The struggles that followed led to Spirit Airlines filing for Chapter 11 bankruptcy protection in November 2024. The development of advanced air mobility may receive a boost under Trump.
Given the abovementioned positives, the inclusion of airline stocks in one’s portfolio seems prudent. The stocks below have a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
All our choices have performed better than the industry in terms of price over the past six months.
Six-Month Price Comparison
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Our Choices
United Airlines, based in Chicago, currently sports a Zacks Rank #1. The Zacks Consensus Estimate for 2025 earnings has been revised 7.5% upward over the past 60 days.
Strong air travel demand, supported by new routes, represents a major tailwind for UAL. The environment-friendly approach also bodes well for the company.
American Airlines is based in Fort Worth, TX. The gradual increase in air travel demand (particularly leisure) has been aiding AAL. Low fuel costs are driving the bottom line.
Over the past 60 days, the Zacks Consensus Estimate for 2025 earnings has increased 29.7%. AAL currently sports a Zacks Rank #1.
Delta is based in Atlanta, GA. The airline is benefiting from increased air travel demand. The carrier’s shareholder-friendly attitude also bodes well.
Over the past 60 days, the Zacks Consensus Estimate for 2025 earnings has been revised 5.2% upward. DAL currently carries a Zacks Rank #2.
Southwest Airlines, based in Dallas, currently carries a Zacks Rank #2. The Zacks Consensus Estimate for current-year and next-year earnings has remained stable over the past 90 days.
Upbeat air travel demand is aiding Southwest Airlines immensely. As part of its growth strategy, LUV is focused on its cost-cutting initiatives and fleet-modernization techniques. LUV's liquidity position is also encouraging.
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