Many countries, including the United States, have reported record COVID-19 omicron infections. Furthermore, the WHO has warned that the variant still poses a “very high” risk. This has caused airline companies to cancel more than 2,000 flights since Christmas Eve. Also, customers are canceling their holiday flights of their own volition.

According to FlightAware, which tracks flight status in real-time within, into, or out of the United States, 1,237 flights have been cancelled today. Also, many travel experts believe that the omicron variant could cause significant trip cancellations in the first quarter of 2022.

Given this backdrop, we think investors are better off avoiding fundamentally weak airline stocks Delta Air Lines, Inc. (DAL), United Airlines Holdings, Inc. (UAL), American Airlines Group Inc. (AAL), and JetBlue Airways Corporation (JBLU). 

Delta Air Lines, Inc. (DAL)

DAL is an Atlanta, Ga.-based air transportation company that serves the United States and internationally. The company operates through two segments: Airline and Refinery. It also maintains complementary portfolio businesses, such as its cargo business and its Maintenance, Repair, and Overhaul (MRO) operation. DAL runs a fleet of approximately 1,100 aircraft.

DAL’s total operating revenue was $9.15 billion in the quarter ended Sept. 30, 2021. However, the company’s total operating expenses came in at $6.95 billion.

DAL’s EPS is expected to decrease 23.7% per annum over the next five years. The stock has declined 9.7% in price over the past three months.

DAL’s POWR Ratings are consistent with this bleak outlook. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. The stock has a D grade for Stability. We have also graded DAL for Growth, Value, Momentum, Sentiment, and Quality. Click here to access all of DAL’s ratings. DAL is ranked #3 of 31 stocks in the F-rated Airlines industry.

United Airlines Holdings, Inc. (UAL)

UAL provides air transportation services in North America, Asia, Europe, Africa, the Pacific, the Middle East, and Latin America. The Chicago-based company transports people and cargo, sells fuel, and offers third parties catering, ground handling, and maintenance services.

This month, UAL and Honeywell joined on a multimillion-dollar investment in Alder Fuels, a cleantech company. Although UAL should be able to use a carbon-negative fuel through this investment, it could weigh heavily on its expenses in the coming months.

During the third quarter, ended Sept. 30, 2021, UAL’s total operating revenue increased 211.4% year-over-year to $7.75 billion. However, the company’s total operating expense grew 63.6% from its year-ago value to $6.71 billion. Its total non-operating income came in at $434 million during the period.

UAL’s EPS is estimated to decrease 129.1% per annum over the next five years. The stock has declined 9.8% in price over the past three months.

It is no surprise that UAL has an overall D rating, which equates to Sell in our POWR Ratings system. Also, the stock has an F grade for Stability and a D grade for Sentiment. Click here to see the additional POWR Ratings for UAL (Value, Growth, Momentum and Quality). UAL is ranked #21 in the Airlines industry.

American Airlines Group Inc. (AAL)

Fort Worth, Tex.-based AAL, which operates as a network air carrier, offers an average of nearly 6,700 flights daily to 350 destinations in 50 countries. The company provides scheduled air transportation services for passengers and cargo through its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington, D.C.

For the third quarter, ended Sept. 30, 2021, AAL’s total operating revenues increased 182.7% year-over-year to $8.97 billion. However, the company’s total operating expenses grew 38.6% from its  year-ago value to $8.37 billion. Its interest expense rose 40% from the prior-year quarter to $476 million.

Analysts expect AAL’s EPS to decrease 105.1% per annum over the next five years. The stock has declined 11.1% in price over the past three months.

AAL’s poor prospects are also apparent in its POWR Ratings. The stock has an F grade for Sentiment and a D grade for Stability. In addition to the POWR Rating grades I have highlighted, one can see AAL’s ratings for Growth, Value, Momentum and Quality here. AAL is ranked #14 in the Airlines industry.

AAL is one of the stocks currently in the POWR Charts trading alert service based upon Christian Tharp’s 5 WINNING Stock Chart Patterns

JetBlue Airways Corporation (JBLU)

Incorporated in 1998, JBLU in Long Island City, N.Y., a global travel company that provides air passenger transportation services. The company’s segments include Domestic, and Caribbean & Latin America. As of Dec. 31, 2020, the company operated a fleet of 63 Airbus A321 aircraft, 1 Airbus A220 aircraft, 13 Airbus A321 neo aircraft, 130 Airbus A320 aircraft, and 60 Embraer E190 aircraft.

JBLU’s total operating revenues increased 300.8% year-over-year to $1.97 billion in the third quarter, ended Sept. 30, 2021. However, the company’s total operating expenses grew 77.2% from its  year-ago value to $1.79 billion. And its interest expense came in at $42 million.

JBLU’s EPS is expected to decrease 126.4% per annum over the next five years. The stock has declined 9% in price over the past three months.

JBLU’s POWR Ratings are consistent with this bleak outlook. The stock has a D grade for Sentiment and Stability. We have also graded JBLU for Growth, Value, Momentum, and Quality. Click here to access all JBLU’s ratings. JBLU is ranked #11 in the Airlines industry.

DAL shares fell $0.18 (-0.44%) in premarket trading Wednesday. Year-to-date, DAL has gained 3.86%, versus a 0.55% rise in the benchmark S&P 500 index during the same period.

About the Author: Priyanka Mandal

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...

More Resources for the Stocks in this Article