Rising 57% in 2024, the S&P Supercomposite Airlines Index comfortably outperformed the 26% jump in the SPDR S&P 500 ETF Trust. This is the index's best annual performance since 2014 and its biggest margin of outperformance over the wider market in a decade.
Leading the airline index, United Airlines Holdings (UAL, Financial) rose 144% this year to rank fourth among S&P 500 companies. The U.S. Department of Transportation reports that Americans returned to air travel in unprecedented numbers, with the Transportation Security Agency noting their 10 busiest travel days in history during 2024.
Strong demand and restricted capacity increase drove the rally. Airlines have concentrated on closing underperforming routes, which helps to explain Barclays Plc's estimates of less than 3% for seat increase by 2025. Below pre-pandemic growth trends, this supports pricing power across the sector.
Undervaluation of airline equities is seen by Barclays analysts, under Brandon Oglenski, For their premium services and worldwide reach, they prefer legacy airlines including United Airlines (UAL, Financial) and Delta Air Lines (DAL, Financial), as well as Alaska Air Group (ALK, Financial) and Frontier Group Holdings (ULCC, Financial), which improves their
frequent flying programs.
