Jim Cramer sees potential for continued strength in airline stocks, provided carriers maintain discipline in flight capacity management. His analysis comes on Monday as major carriers have seen significant stock appreciation in recent months.
What Happened: Delta Air Lines Inc. (NYSE:DAL), United Airlines Holdings Inc. (NASDAQ:UAL), and American Airlines Group Inc. (NASDAQ:AAL) have all rebounded strongly from their recent lows, benefiting from multiple tailwinds.
Cramer highlighted that the sector’s recovery is supported by both macroeconomic factors and industry-specific developments on CNBC.
“The strength can continue for however long the capacity discipline does,” Cramer stated on his Monday show. “For now, these companies are all saying the right things.”
The airline sector is experiencing structural shifts that could mark a departure from traditional boom-bust cycles. Cramer pointed to reduced competition from budget carriers like Spirit Airlines Inc. (NYSE:SAVE) and Southwest Airlines Co. (NYSE:LUV), which have scaled back expansion plans.
Additionally, manufacturing delays at The Boeing Co. (NYSE:BA) have created a natural cap on industry capacity.
Why It Matters: A resurgence in business travel post-pandemic and potential Federal Reserve rate cuts have further bolstered the sector’s outlook. However, Cramer maintained his characteristic caution, noting that airlines historically perform better as trading vehicles rather than long-term investments.
Major aviation exchange-traded funds, including U.S. Global Jets ETF (NYSE:JETS), Gabelli Commercial Aerospace and Defense ETF (NYSE:GCAD), and iShares U.S. Aerospace & Defense ETF (BATS:ITA), have risen by over 30% in the past year, according to data from Benzinga Pro.
“My gut tells me maybe to ring the register before the music stops,” Cramer advised while acknowledging the possibility of a structural shift in the industry’s dynamics.
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Courtesy of American Airlines.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
