Wall Street opened on a quiet note Thursday, pausing after Nvidia’s surge pushed its market cap past $4 trillion, while airline stocks saw gains thanks to an optimistic outlook from Delta.

In the early hours of trading, the Dow Jones Industrial Average slipped 68.24 points (0.15%) to 44,390.06, the S&P 500 edged down 0.83 points (0.01%) to 6,262.43, while the Nasdaq Composite inched up 21.29 points (0.10%) to 20,632.63.

Delta Air Lines, the world’s largest airline by revenue, posted strong second-quarter results and reinstated its full-year guidance after withdrawing it last quarter due to trade-related uncertainty. The upbeat earnings sent Delta’s stock soaring over 10% in early trading and sparked a broader rally in airline shares, including gains for American Airlines, Southwest, and United Airlines.

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For the quarter, Delta reported adjusted revenue of $15.5 billion and a 1% increase from the same period last year. Adjusted earnings per share (EPS) came in at $2.10, beating expectations of $2.07. Operating income stood at $2 billion with a 13.2% margin, down 1.5 percentage points year-over-year. Delta restored its full-year EPS forecast to $5.25 to $6.25 and projected free cash flow between $3 to $4 billion. The airline expects current-quarter revenue growth between 0 to 4%, operating margins of 9 to 11%, and EPS in the range of $1.25–$1.75.

CEO Ed Bastian cited improving macroeconomic clarity, recent tax reforms, and progress in global trade negotiations as key reasons for reinstating guidance. He said both business and consumer travel demand is rebounding, especially in premium segments. Delta, which targets high-end leisure and corporate travelers, said its premium cabin revenue grew 5% year-over-year, outpacing its economy segment. Loyalty revenue also climbed 8%, thanks to increased spending and new card signups tied to its American Express co-branded credit card, which brought in $2 billion this quarter.

Despite headwinds from trade tensions, Bastian said international travel demand remains strong, with 80% of Delta’s international travelers being U.S. residents. He added that the airline’s investments in reliability and premium services are paying off, as travelers increasingly seek better value and experiences.

Delta Air Lines (DAL) delivered a stellar Q3 2025 earnings report, exceeding expectations with an adjusted EPS of $2.10 and $15.5 billion in revenue. This performance, fueled by premium revenue growth, cost discipline, and strategic capacity management, underscores a sector-wide recovery for airlines. For investors, Delta’s results serve as a catalyst to reassess undervalued airline stocks poised for growth amid improving travel demand and operational efficiencies.

Delta’s Strong Q3: A Blueprint for Sector Recovery

Delta’s earnings highlight three critical drivers for the broader airline industry:

1. Premium Revenue Resilience: Premium cabin sales rose 5%, with American Express co-brand card revenue hitting $2 billion—a 10% year-over-year jump. This diversification into high-margin segments insulates airlines from main cabin demand volatility.

2. Cost Control Mastery: Non-fuel unit costs grew just 2.7%, while fuel savings from lower prices and operational improvements (e.g., 45 million gallons saved vs. 2019) bolstered margins. Delta’s 13.2% operating margin exemplifies the industry’s shift toward sustainable profitability.

3. Strategic Capacity Adjustments: Post-peak reductions in domestic seats, paired with international growth, demonstrate airlines’ ability to align supply with demand.

The stock’s 12.5% pre-market surge to $56.60 (now trading near $58) reflects investor confidence. A would show a recovery from pandemic lows, validating its turnaround strategy.

Sector-Wide Implications: A Turnaround for Undervalued Airlines

Delta’s success signals that airlines with strong balance sheets and cost discipline can thrive even in a moderate economic environment. This bodes well for peers with similar strengths but lower valuations.

Top Undervalued Picks for Airline Growth

1. United Airlines (UAL)

– Why It’s Undervalued: Trading at a P/E of 5.92 (vs. Delta’s 9.74), UAL is a value play despite its 2024 stock surge.

– Growth Drivers: Transatlantic demand (its strongest market) and premium travel recovery are key. A would highlight its momentum.

– Metrics: Return on equity of 33.57% and plans to expand its premium services (e.g., United First) position it for margin expansion.

2. International Consolidated Airlines (BABWF)

– Why It’s Undervalued: Post-merger integration (British Airways/Iberia) streamlined operations, yet it trades at a P/E of 4.85.

– Growth Drivers: Europe’s robust business travel rebound and its transatlantic network (handling 40% of U.K.-U.S. traffic) offer outsized growth.

– Metrics: Fuel cost declines and route optimization could lift margins further.

3. Lufthansa (LHA.DE)

– Why It’s Undervalued: With a 4.06% dividend yield and P/E of 7.29, Lufthansa offers income and growth potential.

– Growth Drivers: European leisure travel is booming, and its expanded network (Swiss, Austrian, Brussels Airlines) captures this demand.

– Metrics: A would underscore its reliability as a yield-focused investment.

4. Copa Holdings (CPA)

– Why It’s Undervalued: Trading at a P/E of 11.6, it’s cheaper than peers while expanding its Latin American footprint.

– Growth Drivers: Modernizing its fleet with Boeing 737 MAX-8s and targeting 12 new international routes by 2030.

– Metrics: Ancillary revenue growth (baggage fees, premium seating) could drive margins higher.

Risks and Considerations

Fuel Volatility : While prices remain low, sudden spikes could pressure margins.

: While prices remain low, sudden spikes could pressure margins. Economic Downturn : Airlines remain sensitive to consumer spending; U.S. GDP growth of 1.5% in 2025 is a cautious baseline.

: Airlines remain sensitive to consumer spending; U.S. GDP growth of 1.5% in 2025 is a cautious baseline. Labor Costs: Unions may demand higher wages, squeezing profits.

Investment Strategy

Value Plays : UAL and BABWF offer low P/E ratios and strong growth catalysts.

: UAL and BABWF offer low P/E ratios and strong growth catalysts. Dividend Picks : Lufthansa’s 4.06% yield provides income stability.

: Lufthansa’s 4.06% yield provides income stability. Growth Exposure: Copa’s Latin American expansion and Delta’s premium dominance are bets on regional demand.

Final Take

Delta’s Q3 results confirm that airlines can balance cost discipline and revenue diversification to thrive. Investors should prioritize stocks with:

1. Low debt levels and strong free cash flow (e.g., Delta’s $3–4 billion target).

2. Exposure to premium segments and international markets.

3. Robust balance sheets to weather fuel or economic shocks.

The sector’s rebound is underway, and these undervalued airlines could be the next winners.

Summer finally arrives this week, and temperatures aren’t the only thing heating up in the U.S. Consumer sentiment finally rebounded last month after a disappointing start to 2025, keyed by a trend reversal in domestic stocks and a softening tariff stance from the Trump administration.

Consumer surveys are notoriously fickle, and answers aren’t guaranteed to be truthful. But a sentiment reversal could bode well for the travel industry, which spent most of Q1 lowering expectations for 2025. Today, we’ll look at three travel stocks that could have upside surprises in store this summer.

Uptick in Consumer Surveys: A Bullish Signal for Travel Sector

The Survey of Consumers from the University of Michigan is one of the primary methods economists use to measure consumers’ feelings about the economy. Consumer sentiment takes into account factors such as business conditions, inflation expectations, and personal financial situations.

Released monthly, the survey is conducted through at least 500 phone calls, asking business owners and consumers a series of 50 questions about the state of the economy. An index is created with these aggregated answers, shown in the chart below.

After six straight months of pessimistic readings, consumer sentiment rebounded sharply in May, posting a nearly 16% uptick from the previous month. Consumers cited a moderating trade war and tariff reductions as the most significant contributing factor. However, the latest reading of 60.5 is still well below the 74.0 figure from December that factored in the post-election bump, and nearly 40% below the pre-pandemic number.

Consumer sentiment surveys are merely one part of the macro puzzle, and people frequently act differently than they say they’re going to do. For example, consumer sentiment remained subdued in 2021 and 2023, despite spending data indicating consumer strength, and corporate earnings from Q1 were solid, despite anxious survey data. However, the correlation in the other direction likely remains strong—when consumers report feeling positive, their spending often increases. And naturally, the biggest beneficiary of an optimistic summertime consumer is the travel sector.

Top Three Travel Stocks to Ride the Rebound

The travel sector comprises various components, including airlines, hotels and accommodations, cruise lines, and reservation services. Many of these industries have struggled in 2025, missing earnings expectations and revising guidance downward. However, now that sentiment is rebounding, here are three promising stocks at the top of their respective industries that investors should watch in the second half of 2025.

United Airlines: Best Value in the Airline Industry

United Airlines Holdings Inc. (NASDAQ: UAL) is one of the three major carriers in the United States, along with Delta Air Lines Inc. (NYSE: DAL) and American Airlines Group Inc. (NASDAQ: AAL). United and Delta were the only two airlines to turn a profit in Q1, and United managed to surpass EPS projections, while Delta missed its estimates significantly.

Strong Q1 earnings aren’t the only reason to prefer United to the competition. United has better net margins than Delta or American, along with the most cash flow per share ($2 billion in free cash flow on the balance sheet). But it also trades at just 5.1x forward earnings with a price-to-earnings (P/E) growth rate of 1.19, indicating a reasonable valuation and sustainable growth metrics.

Royal Caribbean: King of the Cruise Lines

Like the airline industry, the cruise lines are categorized into a Big Three:Royal Caribbean Cruises Ltd. (NYSE: RCL), Carnival Corp. (NYSE: CCL), and Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH). RCL may not be the biggest or travel to the most ports, but it’s the cruise line stock with the most promise thanks to its impressive margins and dividend.

Royal Caribbean’s high-margin cruises make it the envy of the industry, and its sales have been experiencing tremendous growth. In Q1, the company reported net margins of 19.38%, well above Carnival’s 8.07% and Norwegian’s 9.05%. It was also the only cruise line to turn a profit, which justifies its higher valuation compared to its peers. RCL is also the only cruise line to pay dividends, which currently yields 1.12%.

Booking Holdings: A Firm Grip on Reservations

If you’re long enough in the tooth, you might remember booking a vacation through a travel agent, who would arrange your flight, hotel accommodations, rental car, or any other amenity you may need on the trip. Today, most of this service is conducted through websites or mobile apps, such as Priceline, Agoda, Booking.com, Kayak, or OpenTable, all of which are properties of Booking Holdings Inc. (NASDAQ: BKNG).

The company’s Q1 2025 earnings report was a canary in the coal mine of the sentiment rebound. BKNG reported on April 9 and smashed top and bottom line expectations, while also raising guidance. The Q1 performance made it a big earnings season winner, and we’re now seeing why executives raised guidance at the time despite prevailing wisdom. BKNG also has superior metrics to its largest competitor, Expedia Group Inc. (NASDAQ: EXPE), including higher EPS and better profit margins (22.58% vs. 8.78%). EXPE also missed on EPS and revenue in Q1, giving Booking Holdings a significant advantage at the moment.

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The article “3 Travel Stocks to Play the Consumer Sentiment Rebound” first appeared on MarketBeat.

Hilton’s loyalty program has 211 million members now. That’s a lot of people who might be sad if a future AI tool books them into a Marriott instead. So executives are investing in AI to keep as much control over hotel booking patterns as possible.

Trump’s Impact on Travel Read how the first 100 days of U.S. President Donald Trump’s actions and policies are shaping the future of travel, and get insights into the industry’s evolving response. Read how the first 100 days of U.S. President Donald Trump’s actions and policies are shaping the future of travel, and get insights into the industry’s evolving response. Read the Stories

Hilton Worldwide has entered 2025 with increasing optimism about its growth prospects. President and CEO Chris Nassetta said he’s banking on a post-election boost in corporate travel and a continued recovery in China.

“We are well positioned for another strong year, driven by sustained demand across key segments and a robust development pipeline,” Nassetta said during an earnings call Thursday.

Nassetta pointed to the U.S. election results as a potential tailwind for business travel, particularly in corporate-heavy markets.

“We’re super-optimistic about what’s going to go on broadly with the economy,” Nassetta told analysts. “When you lift above all the noise, I still believe the opportunity is broadly even better than we thought it was going to be.”

Nassetta said greater clarity around the likely direction of tax and regulatory policies would give corporations confidence in making decisions and to increase business travel. He forecasted a notable uptick in business travel by major companies, particularly in the tech

Summary

Companies Passenger traffic growth slows, fares decline

Airlines cut June quarter capacity amid slowing demand

S&P 500 passenger airlines index down 15% this year

CHICAGO/NEW YORK, March 27 (Reuters) – U.S. airlines were flying high less than two months ago on talk of a new golden age , as strong travel demand and tight industry-wide capacity raised the prospect of a multi-year profit boom

But President Donald Trump ‘s broad tariffs and a crackdown on government spending have upended that optimism. Tourists and companies have reduced spending amid rising economic uncertainty, forcing carriers to cut their first-quarter profit forecasts

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With travel a discretionary item for many consumers and businesses, growing odds of weak economic growth and high inflation have clouded the outlook for the remainder of the year as well.

“Your first needs are food and shelter. And then, we’re a little bit down the list of expenditures,” said David Neeleman, CEO of low-cost carrier Breeze Airways, in an interview. “If you don’t have a job, you’re not going to go buy an airline ticket.”

United CEO Scott Kirby has warned of a large drop in industry-wide capacity by the second half of August if demand does not rebound.

To be sure, bookings for premium and long-haul travel are holding up. United reported an 8% year-on-year jump in spring international bookings.

Some of the demand slowdown is also due to recent safety incidents . Amanda Demanda Law Group data shows airplane safety concerns reached an all-time high in February, with Google searches for “Are planes safe now?” up 900%.

Airlines expect the hit from safety incidents to fade soon. But they are less sure about economic pressures.

WARNING SIGNS

U.S. consumer confidence plunged to the lowest level in more than four years in March, with future expectations for income, business, and labor market conditions hitting a 12-year low, a Conference Board survey showed on Tuesday.

Air tickets sold through U.S. travel agencies fell 8% month-on-month in February after a 39% jump in January. Both corporate and leisure trips were down, Airlines Reporting Corp data showed last week.

Annual growth in passenger traffic slowed to 0.7% in March from 5% in January, according to U.S. Transportation Security Administration data.

Item 1 of 4 Travelers wait to check in at John F. Kennedy International Airport in New York City, U.S., April 6, 2023. REUTERS/Eduardo Munoz/File Photo [1/4] Travelers wait to check in at John F. Kennedy International Airport in New York City, U.S., April 6, 2023. REUTERS/Eduardo Munoz/File Photo Purchase Licensing Rights , opens new tab

Weakening demand is hurting the industry’s pricing power. Fares posted their first year-on-year decline in six months in February, according to data from the U.S. Labor Department.

“There’s going to be some type of slowdown,” Frontier CEO Barry Biffle said in an interview.

Airlines are still backing their full-year earnings estimates. But that could change if demand remains weak during summer, usually the industry’s most profitable season.

Biffle said much depends on the labor market. “As long as the employment is good, the leisure customer will be fine,” he said.

Jobless claims have only inched up, thus far. But inflationary worries are making travelers more cautious.

Jacob Brown, a 24-year-old Denver school teacher, is flying less, avoiding hotels and spending less during his trips due to inflation.

Brown recently flew to Las Vegas but took the red-eye flight back to Denver to save on lodging.

“I’m only traveling when it’s at an absolute minimal cost,” he said.

Credit and debit card spending on airlines fell 7.2% in February from a month earlier and was the weakest in at least six months, according to Bank of America data.

Businesses are also sitting tight. The January-March quarter tends to be the busiest period after the July-September quarter for business travel, but bookings have been underwhelming.

Two weeks back, Delta said its corporate bookings growth had dropped into the low single digits after a 10% year-on-year increase in January.

United said this month its government-related travel bookings had halved, adding reduced government spending was having a ripple effect on domestic tourism.

Gabe Rizzi, president of corporate travel agency Altour, said bookings from government contractors and companies in financial services, renewable energy, technology and manufacturing have declined as much as 10% from a year ago.

“A lot of government agencies and government subcontractors, which we service, are tightening up the bootstraps,” Rizzi said.

Reporting by Rajesh Kumar Singh Editing by Rod Nickel

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