In recent years, there has been a surging demand in the tourism industry. This directly drives the demand for air travel and contributes to a broader economic ecosystem that benefits the airline industry. This synergy between tourism and aviation is a significant factor in the continued growth and prosperity of the airline sector.

Therefore, the global airline industry is expected to grow at a CAGR of 3.5% by 2032. Also, the rapidly increasing investments by aerospace companies in the adoption of cloud-based technologies and services are boosting the growth of global AI in the aviation market. The global artificial intelligence in aviation market is forecasted to grow at a CAGR of 14.8% by 2034.

Against this backdrop, let’s compare two established airline stocks to analyze which airline stock is ready for takeoff: United Airlines Holdings, Inc. (UAL - Get Rating) and Delta Air Lines, Inc. (DAL - Get Rating).

The Case for United Airlines Holdings, Inc. Stock

Valued at $34.89 billion by market cap, United Airlines Holdings, Inc. (UAL - Get Rating) provides air transportation services in North America, Asia, Europe, Africa, the Pacific, the Middle East, and Latin America. The company transports people and cargo through its mainline and regional fleets.

UAL has gained 155.9% over the past six months to close the last trading session at $106.08.

In terms of the trailing-12-month CAPEX/Sales, UAL’s 9.84% is 249.9% higher than the 2.81% industry average. Likewise, its 0.79x trailing-12-month asset turnover ratio is marginally higher than the industry average of 0.78x.

In the fiscal fourth quarter that ended on December 31, 2024, UAL’s total operating revenues increased 7.8% year-over-year and amounted to $14.70 billion. The company’s adjusted net income grew 64.2% from the prior-year quarter to $1.09 billion. Its adjusted EPS grew 63% year-over-year to $3.26.

Street expects UAL’s revenue for the fiscal first quarter (ending March 2025) to increase 8.3% year-over-year to $13.58 billion. In addition, it surpassed the revenue and EPS estimates in each of the trailing four quarters, which is promising.

UAL’s POWR Ratings reflect bright 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.

UAL is ranked #5 out of 25 stocks in the Airlines industry. It has an A grade for Growth and a B for Value. To see UAL’s Momentum, Sentiment, Quality, and Stability ratings, click here.

The Case for Delta Air Lines, Inc. stock

Valued at $42.71 billion by market cap, Delta Air Lines, Inc. (DAL - Get Rating)  provides scheduled air transportation for passengers and cargo worldwide. The company operates through two segments: Airline and Refinery. 

DAL has gained 25.8% over the past nine months but declined 1.1% over the past month to close the last trading session at $66.19.

In terms of the trailing-12-month ROCE, DAL’s 26.22% is 97% lower than the 13.31% industry average. However, its 0.02% trailing-12-month levered FCF margin is 99.8% higher than the industry average of 6.65%.

DAL’s adjusted operating revenue for the fourth quarter that ended December 31, 2024, was reported at $1.74 billion. The company’s adjusted net income and adjusted earnings per share came in at $1.20 billion and $1.85, respectively.

Street expects DAL’s revenue for the first quarter ending March 2025 to increase marginally year-over-year to $13.79 billion. Moreover, the company’s EPS for the same quarter is expected to be $0.86. Moreover, the company surpassed consensus revenue estimates in each of the trailing four quarters.

DAL’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.

DAL has a C grade in Value, Momentum, Stability, Sentiment, and Quality. It is ranked #14 in the same industry.

Click here for the additional POWR Ratings for DAL (Growth).

United Airlines vs. Delta Air Lines: Which Airline Stock Is Ready for Takeoff?

The worldwide airline sector is expected to grow in the next few years, owing to rising disposable income, rapidly growing middle class, and increased travel demand. Leading airline companies like UAL and DAL stand to capitalize on the optimistic industry outlook. However, UAL’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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DAL shares were trading at $64.20 per share on Tuesday afternoon, down $1.99 (-3.01%). Year-to-date, DAL has gained 6.12%, versus a 3.03% 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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