Air travel is becoming the preferred choice for customers globally, driven by its convenience, speed, and cost-effectiveness. Also, the availability of online booking platforms and mobile apps has made it easier for customers to search for and book flights, further contributing to the growth of the airline market. Besides, the global flight market is anticipated to reach $770 billion by 2029, exhibiting a CAGR of 4.4%.

Additionally, the airline industry is evolving by adopting advanced technology and sustainable practices, with manufacturers and operators focusing more on environmental awareness and operational efficiency. Airlines are investing in next-gen aircraft that offer better fuel efficiency, lower emissions, and increased passenger comfort.

Against this backdrop, let’s compare two established airline stocks to analyze which airline stock is set to soar higher: American Airlines Group Inc. (AAL - Get Rating) and Alaska Air Group, Inc. (ALK - Get Rating).

The Case for American Airlines Group Inc. Stock

Valued at $11.29 billion by market cap, American Airlines Group Inc. (AAL - Get Rating) operates as a network air carrier. The company provides scheduled air transportation services for passengers and cargo. It operates a mainline fleet of 965 aircraft. 

AAL has gained 85.4% over the past six months to close the last trading session at $17.17.

In terms of the trailing-12-month CAPEX/Sales, AAL’s 4.95% is 73.9% higher than the 2.85% industry average. Likewise, its 0.87x trailing-12-month asset turnover ratio is 11.1% higher than the industry average of 0.78x.

In the fiscal fourth quarter ending on December 31, 2024, AAL’s total operating revenues increased 4.6% year-over-year, totaling $13.66 billion. The company reported an operating income of $1.13 billion, while its net income grew significantly from the prior-year quarter to $590 million. Its EPS grew considerably year-over-year to $0.84.

Street expects AAL’s revenue for the fiscal first quarter (ending March 2025) to increase 4.4% year-over-year to $13.12 billion. In addition, it surpassed the EPS estimates in three of the trailing four quarters, which is promising.

AAL’s POWR Ratings reflect strong prospects. It has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

AAL is ranked #7 out of 25 stocks in the Airlines industry. It has a B grade for Value and Growth. To see AAL’s Momentum, Sentiment, Quality, and Stability ratings, click here.

The Case for Alaska Air Group, Inc. stock

Valued at $9.35 billion by market cap, Alaska Air Group, Inc. (ALK - Get Rating) operates airlines. It operates through three segments: Mainline, Regional, and Horizon. The company offers scheduled air transportation services for passengers and cargo on Boeing jet aircraft.

ALK has gained 75.9% over the past nine months to close the last trading session at $75.92.

In terms of the trailing-12-month gross profit margin, ALK’s 22.78% is 28% lower than the 31.65% industry average. However, its 7.93% trailing-12-month levered FCF margin is 14.9% higher than the industry average of 6.90%.

ALK’s total operating revenue for the second quarter that ended December 31, 2024, was reported at $3.53 billion. The company’s net income and earnings per share came in at $71 million and $0.55, respectively.

Street expects ALK’s revenue for the first quarter ending March 2025 to increase 44.2% year-over-year to $3.22 billion. However, the company’s loss per share for the same quarter is expected to be $0.56. Moreover, the company surpassed consensus EPS estimates in each of the trailing four quarters.

ALK’s mixed fundamentals are reflected in its POWR Ratings. The stock has an overall C rating, translating to a Neutral in our proprietary rating system.

ALK has a C grade in Value, Momentum, and Quality. It is ranked #17 in the same industry.

Click here for the additional POWR Ratings for ALK (Growth, Sentiment, and Stability).

American Airlines (AAL) vs. Alaska Air Group (ALK): Which Airline Stock Is Set to Soar Higher?

The airline industry is set for a period of transformation driven by advancements in technology, sustainability efforts, and evolving consumer demands. Leading airline companies, such as AAL and ALK, stand to capitalize on the optimistic industry outlook. However, AAL’s higher profitability and promising near-term outlook favor it as the better stock pick.

Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Airlines industry here.

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AAL shares closed at $17.17 on Friday, up $0.11 (+0.64%). Year-to-date, AAL has declined -1.49%, versus a 2.51% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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