Airline ETF Catches a Strong Tailwind

“With the economy improving, incomes on the rise and consumer confidence at multiyear highs, airline executives expressed optimism in continued flight demand growth and profitability,” Holmes said.

According to October’s Airline Business Confidence Survey, conducted by the International Air Transport Association (IATA), 80% of airline chief financial officers (CFOs) expected profits improved in the third quarter compared to the same three-month period in 2016. About 87% of respondents were confident profitability would persist or improve over the next 12 months. Additionally, 86% of CFOs reported increased passenger demand year-over-year in the third quarter while 71% expected traffic volumes to rise a year from now.

The industry is also supported by strong fundamentals with high barriers of entry that makes the sector capitalize on a wide economic moat that has attracted the attention of prominent value investor Warren Buffett.

JETS follows the U.S. Global Jets Index, which uses fundamental screens to select airline companies, with an emphasis on domestic carriers, along with global aircraft manufacturers and airport companies. Top holdings include American Airlines Group (NYSE: AAL) 12.0%, United Continental (NYSE: UAL) 11.6%, Delta Airlines (NYSE: DAL) 12.1% and Southwest Airlines (NYSE: LUV) 11.6%.

For more information on airline ETFs, visit our Airline category.