The U.S. airline sector is set to fly high in 2026, with sector companies expected to generate a combined $41 billion in net profit in 2026, up from $39.5 billion in 2025, according to the International Air Transport Association (IATA).
That would mark a new industry record. Operating profits are also set to jump this year, from $67 billion to $72.8 billion. Operating margins are expected at 6.9%, up from 6.6% last year, and revenues and passenger count are set to soar too.
Below the surface, however, airlines face several upside challenges. At the top of that list is net profit margins, which are expected to hold steady at just 3.9%. Net profit per passenger is forecast at $7.90, below the 2023 high of $8.50.
That means while airline companies are stacking more cash, they're still operating on razor-thin margins. Simultaneously, higher operating costs are matching and, in some cases, outpacing airliner revenue growth.
That's why, even with the spring and summer travel season fast approaching, investors need to choose airline stocks carefully.
On the topic of thin margins, airline crew costs are up to 7% in 2025. Meanwhile, ground-handling expenditures also rose by up to 7% last year, according to Boston Consulting Group. BCG expects airline companies to "permanently shift their cost structures" via more robust cost management, more deployment of artificial intelligence tools and applications, and industry consolidation.
"For example, 97% of airlines say they plan to integrate or are already integrating AI into their global business, especially on the maintenance and operations side," BCG noted. "Many have already begun to move forward with individual AI initiatives to improve efficiency."
Stock market investors should take this scenario as good news. History shows airline stocks tend to outperform when profitability stabilizes and fuel costs cooperate, especially when demand remains strong, as we're seeing in early 2026. The market already concurs with that assessment, with the benchmark S&P 500 Airlines Industry Index up 18.4% over the past 90 days, well ahead of the 1.4% posted by the S&P 500 Index over the same time period.
In an upbeat airline environment, which sector stocks look ready to soar in 2026? These three airline stocks should go full throttle in the next few months as flying activity increases.
Trading at $13 per share at the end of February and down -9% so far in 2026, American Airlines
The airline giant is making some savvy moves, including a new co‑brand credit card deal with Citi, which should boost card activity, increase cash payment volume, and increase non‑ticket revenue and cash flow.
"American Airlines Group is poised for a positive outlook due to a projected ~$1 billion in steady state ex-fuel cost savings and a 20% increase in premium seats, which could enhance revenue generation as credit card economics align with peers," Benzinga analysis noted. Additionally, the company is expected to reduce debt by approximately $6 billion through 2027, further strengthening its financial standing and improving its balance sheet.
Industry analysts are on board, with Citi's John Godyn recently issuing a Buy call on the stock with a $21 price target. J.P. Morgan's Jamie Baker followed suit with a Buy outlook and a $22 per share price target.
Billionaire investor Stanley Druckenmiller is also boarding AAL stock, snapping up 640,000 shares valued at $9.8 million in the fourth quarter of 2025.
Delta Air Lines
Trading at $66 per share and down -3.8% year-to-date, Delta
First up is the company's call to expand its commercial widebody fleet by adding 31 next-generation Airbus widebody aircraft, with deliveries set for 2029.
Delta officials expect the new widebody fleet additions to "add more premium capacity to medium and long-haul international markets while improving fuel efficiency and margins," in a January 27 statement.
That's just for starters. Delta's joint ventures in Europe and Asia are beginning to bear fruit, providing diversified revenue streams as global passenger numbers, as noted above, are expected to exceed 5.2 billion in 2026. An airliner like Delta, with strong transatlantic and transpacific networks, stands to benefit from its expanding presence overseas.
Airline analysts are generally backing the stock, with a Strong Buy consensus call on DAL and an average $83 price target, marking a 24% price upgrade.
If operating margins across the airline sector expand, as expected, to 6.9%, Delta, which is already topping industry averages, should see earnings leverage take off in 2026.
United Airlines
Trading at $108 per share and up over 6% over the past month, Chicago-based United Airlines
"United Airlines Holdings is expected to see growth in its international and long-haul travel, leveraging its hub-and-spoke system and major hubs in the U.S., Benzinga analysis noted. "The company is also focused on expanding its sales through efficiency and entering new markets, which could increase its market share and profitability in the future."
New analysis from TD Cowen and UBS is bullish on UAL shares, with a $140 price target for the former and $147 from the latter, representing a 36% price upgrade from UBS.
