Should you sell your airline stocks now?

While most airlines face difficulties due to rising fuel prices, others may benefit

One of the industries most severely impacted by the Iranian conflict is aviation, which is finding it difficult to recover from a string of devastating shocks.

The Covid pandemic virtually stopped international travel, making the beginning of the decade difficult for the airline sector. The invasion of Ukraine by Russia two years later caused oil prices to soar, increasing airline input costs.

Similar events occurred in 2026 when the US/Israeli conflict with Iran led to the closure of the Strait of Hormuz, which had previously carried about a fifth of the world's oil supplies. This further increased pressure on the price of jet fuel and increased inflation worldwide.

"High oil prices are making the upcoming winter a stress test for airlines," stated Lale Akoner, global market strategist at eToro, an investment platform. "It is challenging to pass on rising labor and fuel costs through higher fares due to geopolitical unrest and pressure on household budgets."

Watch the entire video here: In June, the International Air Transport Association issued a warning that rising fuel prices would cause global airline profits to drop by half by 2026.

Airline stocks are penalized. Up until September 10, 2026, the NYSE Arca Airline Index, which represents US-listed airlines, dropped 11.9 percent, while the STOXX Europe Total Market Airlines Index, which includes European-listed airlines, dropped 12.8 percent.

Although the industry as a whole is clearly going through a difficult time, are there any opportunities despite the disruption?

For airline stocks, what does the acquisition of EasyJets mean?

The purchase of EasyJet (LON:EZJ) by US-based private equity firm Apollo seems to be one of the most significant effects of the collapse in airline stocks.

A series of bids from private equity firm Castlelake were rejected by EasyJet, which described them as "opportunistic" because they came after the airline's share price fell precipitously. Before Castlelakes' initial offer, EasyJets' stock price had dropped by more than 30% in the year leading up to the end of May.

However, the board of EasyJets was eventually forced to accept a bid from Castlelakes rival Apollo, and it now appears that the airline will be purchased.

"EasyJet is now a different kind of investment, with Apollo agreeing to buy the airline for 715p a share," Akoner stated. "The shares have been largely protected from the most recent fuel shock by the deal, which looks likely to be finalized.

But before the anticipated completion in early 2027, investors should exercise caution because the majority of the takeover gain has already been realized."

The acquisition of EasyJets demonstrates how much pressure airlines are under, and institutional investors are already taking advantage of this.

"We believe that winners could still emerge from this challenging environment," Akoner stated. "Unprofitable routes are already being cut by airlines, and weaker operators might have to go farther. The most efficient airlines should be able to gain market share and ticket prices should be supported by fewer available seats.

Investors perceive the industry more and more as a competition between businesses that rely primarily on passenger growth and those that have real cost and balance-sheet advantages."

Which airlines have the potential to be strong?

The founder and portfolio manager of Holland Advisors, Andrew Hollingworth, believes that since Ryanair (DUBLIN:RYA) has perpetual pricing power, the worse things get for most airlines, the better.

"The lowest cost producer is Ryanair," stated Hollingworth. "Everyone will have to pay if they raise their prices by three euros because no other airline is even close to them.

However, the majority of other airlines only have pricing power during favorable conditions.

"They can raise their prices and pass on cost inflation if the oil price is moderate or rising, but the economy is good, demand on their routes is good, and they haven't got new competitors," Hollingworth stated. "But good luck if the economy isn't doing well and fuel prices are still going up. Demand is insufficient to cover cost inflation."

Similar to Ryanair, Jet2 (LON:JET2) is a low-cost airline, but its scale economy allows it to offer customers more than just low prices.

Hollingworth clarified, "It's a package holiday company, not an airline." "Jet2 offers you customer service in addition to good value when it comes to package vacations."

Hollingworth doesn't think this is fully priced, but it does provide the business with great customer loyalty.

"The stock market's got it on a very low P/E ratio because it says it's just another average tour operator like Tui, but that's not how the customer sees it," he stated. "The client observes that they provide them with excellent service and value for their money."

How to buy airline stocks.

You have a few options (aside from purchasing company shares outright) if you believe it's time to purchase rather than sell airline stocks.

The US Global Investors Travel UCITS ETF (LON:TRIP), an actively managed ETF that provides exposure to travel and tourism stocks, and the iShares STOXX Europe 600 Travel and Leisure UCITS ETF (DE:EXV9), a tracker fund that tracks its namesake index, are two examples of thematic exchange-traded funds (ETFs) that offer exposure to the travel industry. Despite being diversified travel and leisure funds, both portfolios heavily include airline stocks, such as Ryanair.

Another choice is the Hollingworth-managed VT Holland Advisors Equity Fund. As of August 28, it has Jet2 as its biggest holding (8.1 percent of the portfolio) and Ryanair as its sixth-largest (4.4 percent). Keep in mind that this fund is not specifically focused on airlines, but rather seeks to invest in attractive business models that are trading at favorable valuations in a variety of industries.