MW Are airline stocks set to rally like it's 2024? Here's what might be missing this time around.

By Claudia Assis

United Airlines scheduled to report earnings tomorrow, on the heels of Delta's success

Delta Air Lines Inc.'s better-than-expected earnings report has lifted investors' hopes that U.S. airlines could repeat their 2024 feat - a rally in the second half of the year despite a wobbly start.

Shares of major U.S. airlines have been on a tear recently, and Delta's $(DAL.UK)$ second-quarter earnings and restored 2025 guidance have added fuel to that fire.

A big test this week will come Wednesday after the closing bell, when United Airlines Holdings Inc. $(UAL)$ is scheduled to report its second-quarter earnings. American Airlines Group Inc. $(AAL.UK)$ is set to do the same July 24.

Crucially, however, a thing or two might be missing from this year's scenario, with fewer flights expected as airlines trim capacity to fit demand.

Stock valuations are "more demanding," industry demand in general "is an unknown" and several airlines will be facing "tough" comparisons with the fourth quarter of 2024, according to analysts at UBS, who in a note Tuesday said a second-half rally is "possible, but not very likely."

Delta's "meaningfully better-than-expected" outlook for the year has sparked a move up in airline stocks and set off a debate on whether the sector is primed for another second-half rally, they said.

Last year, the U.S. Global Jets exchange-traded fund JETS rose 45% from August 2024 to the end of the year, thanks to supply moderation, heated demand for air travel in the fourth quarter and lower fuel costs. U.S. airlines' stock valuations were cheaper then.

The bar is higher this time around, the analysts said.

There "needs to be a notable acceleration in demand for airline stocks to move higher," which is going to be tougher this year and is more likely in early 2026, they said.

"As such, we would advise patience and a selective approach to investing in the space. Longer-term, we believe [Delta Air Lines] and [United Airlines] are the best way to play the sector," the analysts said.

Delta shares are down 7% this year, compared with a 10% loss for United shares and a 30% decline for American Airlines shares. The Jets ETF is down 1.5% so far in 2025, contrasting with gains of about 6.6% for the S&P 500 index SPX.

Analysts polled by FactSet expect United to report second-quarter adjusted earnings of $3.81 a share on sales of $15.4 billion, compared with earnings of $4.14 a share on sales of $15 billion in the second quarter of 2024.

American Airlines is seen reporting adjusted earnings of 78 cents a share on sales of $14.30 billion, according to FactSet. The airline reported adjusted earnings of $1.09 a share on sales of $14.33 billion in the year-ago quarter.

-Claudia Assis

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July 15, 2025 12:18 ET (16:18 GMT)

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