These airline carriers generate roughly two-thirds of revenue from business travel, and any recovery in corporate pricing as a result of tax reforms could disproportionately benefit those companies.
High oil prices used to be seen as a major issue for airlines’ profitability, but that view is shifting, indicating the industry can endure higher fuel prices.
“The conventional wisdom now is that oil prices are high, so maybe airlines stocks are going to get hit, but I don’t think that’s the case anymore. They are such well-run machines at this point, they’re basically IT businesses masquerading as transportation businesses,” said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, in an interview with CNBC.
Airline stocks look attractive in their own right. For instance, income-oriented investors may notice that airline stocks have seen improved dividend-yield growth. Additionally, the sector shows relatively cheap valuations.
For more information on the airline ETF, visit our Airline category.