3 Financially Fit Airline Stocks Worth Boarding Some airlines will return to profitability sooner than others on account of their effective cost cutting measures, strong balance sheets, and popular route offerings.

The global airline industry suffered its worst year ever in 2020. According to the International Air Transport Association (IATA), passenger volumes plunged 60% due to the coronavirus crisis.

Vaccines and loosened government restrictions put airlines into recovery mode in 2021. Still, passenger volumes are expected to have been well below pre-pandemic levels.

The outlook for the friendly skies is a bit brighter in 2022. Although global air travel is forecast to reach 61% of 2019 levels, industrywide losses are forecast to be trimmed from $52 billion last year to $12 billion.

Some airlines will return to profitability sooner than others on account of their effective cost cutting measures, strong balance sheets, and popular route offerings. Here are three airlines that are positioned to take off sooner—and whose stocks are worth booking a reservation.

What is the Best U.S. Airline Stock?

Southwest Airlines (NYSE: LUV) has long been one of the best run airlines. Its low fares have made it a go-to for travelers and its low-cost income statement a go-to for investors.

In April 2021, Southwest shares climbed past their pre-pandemic level and to within a couple bucks of their $66.99 split adjusted record high. Now trading in the mid-$40's, investors have an opportunity to buy a fundamentally sound company that is poised to recover faster than peers.

The world's largest single-aisle plane operator, Southwest serves more than 100 domestic destinations and 10 international markets. Its focus is the leisure traveler segment which is known to be the source of heavy pent-up demand. As travel conditions improve, expect passengers to flock to Southwest's competitive fares and popular getaways as has historically been the case.

As is typical for the company, the balance sheet is healthy. There is $17 billion in liquidity and a manageable level of debt. A return to profitability is expected in 2022 when peers like American Airlines are forecast to remain in the red. Based on analysts forward earnings projections for this year, Southwest Airlines is trading at 25x forward earnings. This is a reasonable price to pay for an airline that will fly to the front of the pack as industry conditions improve.

What is a Good International Airline Stock?

Ryanair Holdings plc (NASDAQ: RYAAY) is an Irish ADR. The airliner's main hubs are Dublin and London but it operates from 86 bases and has a presence in more than 200 airports across Europe and overseas.

Ryanair is considered the low-cost airline of the region, so it can be viewed as the Southwest of Europe. It similarly has a strong investment-grade balance sheet that puts it in a position to outperform over the next few years.

Lately, Ryanair's passenger metrics have been improved but lagging 2019. With more than 80% of Europe's adult population vaccinated, December 2021 traffic climbed to 9.5 million and 81% of available capacity was filled. Due to Omicron developments, however, management lowered its 2021 traffic forecast to "just under 100 million passengers" and said weaker holiday travel will result in a steeper loss. On the bright side, the company is expecting to see faster growth in the post-Covid era.

It is targeting 225 million guests by fiscal 2026, an ambitious but reachable goal. As travel volumes pick up, Ryanair's low-cost structure should make it one of the biggest beneficiaries of pent-up demand. Analysts are forecasting a sharp return to profitability in fiscal 2023 and smoother air from there. At 17x next year's earnings, Ryanair is one of the most attractive ways to play the airline industry recovery.

Is Hawaiian Holdings a Good Airline Stock?

Back at home Hawaiian Holdings (NASDAQ: HA) is another airline stock worthy of a portfolio position. Although a return to profits is not expected until calendar 2023, boarding now while it is trading under $20 looks like a good move.

The company's main Hawaiian Airlines subsidiary is the leading operator of flights to and from the West Coast and Hawaii. It also charters flights that run between the Hawaiian Islands. Given where it operates, the airline is heavily dependent on Hawaiian tourism.

The tropical state has been understandably slow to re-open to tourists. Passenger volumes are up considerably over 2020 but remain well below those of 2019. Last quarter Hawaiian filled 76% of its available seats and booked more than 10-times the revenue it did the year prior, but higher fuel costs weighed on the bottom line. Looking ahead to 2022, passenger revenues are expected to be up year-over-year but significantly below pre-pandemic levels as tourism continues to get up to speed.

The good news is that Hawaiian Airlines doesn't have a demand problem and serves one of the most sought after leisure destinations. As such, it has been expanding its network to connect more travelers to the islands recently launching a non-stop service to and from Austin, Texas.

Aside from its tropical allure, Hawaiian Airlines is considered one of the most customer-friendly U.S. airlines having been named the most on-time airline for 17 straight years. From a financial perspective, the $2 billion in cash and minimal debt level has the company in a favorable position to endure more turbulence and emerge one of the strongest airlines on the other side of the pandemic.