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Best Airline Stocks to Buy UK – Invest with 0% Commission

The coronavirus pandemic hit several industries extremely hard last year. In turn, many stocks are still down by over 50% in comparison to pre-pandemic levels. At the forefront of this are airline stocks. After all, global travel restrictions remain in place in most regions around the world – meaning that airlines are burning through cash at the rate of knots.

On the other hand, passenger volumes will eventually return to pre-pandemic levels – so there’s plenty of bargain airline stocks still to be had. In this guide, we discuss the best airline stocks to buy in 2021.

Top 5 Airline Stocks 2021

Here’s an overview of the best airline stocks to consider buying in 2021. You can read an in-depth analysis of each stock by scrolling down!

  1. Easyjet – Overall Best Airline Stock to Buy in 2021 – Invest now
  2. Southwest Airlines – Airline Stock With the Strongest Balance Sheet – Invest now
  3. Delta – Airline Stock With a 47% Upside (Pre-Pandemic Levels) – Invest now
  4. American Airlines – High Risk/Reward Airline Stock Investment
  5. United Airlines – 164% Recovery Since Lows of March 2020

Best Airline Stocks UK Reviewed

Investing in airline stocks carries additional risk in the present climate. Crucially, one of the most important things that you need to look at is the strength of the firm’s balance sheet.

Additionally, you also need to consider how the airline stock was performing before the pandemic and how much upside potential there is in the trade.

Taking all of this into account, below we discuss the best stocks in airline companies to buy right now.

1. Easyjet – Overall Best Airline Stock to Buy in 2021

UK budget carrier Easyjet ticks most of the boxes that one should look at when searching for the best airline stocks of 2021. First and foremost, Easyjet shares were performing really well before the pandemic hit. For example, back in August 2019, its shares were priced at 935p. Just 7 months later, Easyjet shares were worth 1,500p each.

That’s an upward swing of 60% in a very short period of time. But, like the rest of the industry, Easyjet stocks then nose-dived. In fact, the shares hit lows of 410p in March 2020. The somewhat good news for investors is that as of February 2021 – Easyjet stocks are prices just 822p. That’s a recovery of over 100% since the aforementioned 52-week lows.

easyjet shares

In terms of the financials, Easyjet recently reporting an 88% decline in quarterly income, with passenger numbers falling by around the same figure. In turn, management at Easyjet has since secured financing from several sources. Most recently, this includes a $1.9 billion (Approx. £1.3 billion) credit facility from a number of banks – including BNP Paribas and Citi.

The good news is that the loan is partially guaranteed by UK Export Finance. Ultimately, at current prices, Easyjey still looks heavily undervalued. The fact it has secure a sizable amount of credit at its disposal should see the budget carrier through the COVID-19 storm.

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2. Southwest Airlines – Airline Stock With the Strongest Balance Sheet

Southwest Airlines (NYSE: LUV) isn’t the most attractive airline stock to buy, especially when you consider its somewhat flat price action prior to the pandemic. However, Southwest is attractive when you look at how the airline stock has recovered since the shares crashed last year.

For example, Southwest Airlines was priced at $57 in February 2020 – and much like the rest of the airline space, its shares capitulated in the following month. Hitting lows of $22 per share, this translated into a decline of over 60% in just a few weeks of trading.

southwest airlines stock

But, Southwest Airlines stocks have recovered nicely since, with a February 2021 price of $52. This is promising for two key reasons. Firstly, the stocks have recovered by over 135% since the lows of March 2020. Furthermore, and perhaps most important, Southwest Airlines stocks are now worth just $5 less than pre-pandemic pricing levels – or 9%.

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3. Delta Airlines – Airline Stock With a 47% Upside (Pre-Pandemic Levels)

Delta (NYSE:DAL) is another airlines stocks that are seeing a slow and steady recovery – even with global restrictions firmly in place. But, of course, much of Delta’s fleet is US-based – so many flights still remain in operation. Albeit, passenger numbers are still minute in comparison to the norm.

Nevertheless, Delta recently published revenues of $3.97 billion in its Q4 earnings report, which was just above market expectations. Crucially, this is still 65% less than what it reported 12 months prior. Nevertheless, Delta has also improved the amount of cash that it is burning through – going from $24 million per day in Q3 to $12 million as of Q4.

delta airline stocks

This is still a considerable amount to burn through, but a major improvement nonetheless. In terms of its stock price action, Delta was priced at $62 per share before the pandemic. The stocks then hit lows of $19 in March 2020 – representing a huge decline of almost 70%.

Those that bought the drip are now looking good, with Delta priced at just over $44 at the time of writing. That’s an attractive recovery of over 120%. With that said, Delta stocks still need a further upside of 47% to get back to pre-pandemic levels – so the shares are arguably undervalued.

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4. American Airlines – High Risk/Reward Airline Stock Investment

If you have a higher appetite for risk and seek a larger upside potential, American Airlines (NASDAQ: AAL) could be the best airline stock to buy. In comparison to the other airline stocks we have discussed thus far, American Airline’s recovery has been somewhat labored. The stocks went from the $30 region down to just $8 between February and March 2020 – resulting in a share price decline of 73%.

12 months on, the stocks are holding just above $17 each. On the one hand, this does translate into a recovery of 112% since the 52-week lows of $8. However, the shares have a long way to go before getting anywhere near pre-pandemic levels of $30. In fact, this would require a further increase of 76%.

american airlines stocks

Whether or not American Airlines shares have the balance sheet to get through the uncertainties of COVID-19 remains to be seen. But, if it does, the upside potential is somewhat attractive – especially for those of you that are looking to target a higher risk/reward ratio. Crucially, if you do opt for American Airlines stocks, you’ll want to keep your stakes low on this one.

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5. United Airlines – 164% Recovery Since Lows of March 2020 

When looking at the stock price action of United Airlines Holdings (NASDAQ: UAL), there are both pros and cons to consider. First and foremost, it is important to note that the stocks were actually performing well before the pandemic. For example, United Airlines was trading at just over $40 per share in mid-2016. Fast forward to pre-pandemic levels and the stocks were worth over $80 each.

That’s a notable upswing of over 100% in less than 5 years of trading. It is fair to assume that this upward trajectory was likely to resume before global travel restrictions put things to a halt. With that said, the speed at which United Airlines stocks dropped in March 2020 was uncanny.

united airlines stock price

Going from $81 to $17 in a matter of weeks, this translates into a stock market capitulation of almost 80%. In terms of its recovery since hitting lows of $17, this has been rewarding for those that bought at the dip. At the time of writing in February 2021, United Airlines stocks are worth $45.

That’s an upward swing of over 164%. However, this airline stock requires a further upside of over 80% just to get back to pre-March 2020 levels. Although this is an attractive upside to target, the risks of United Airlines should not be understated. At the forefront of this is the $1.9 billion loss that United Airlines posted in its recent Q4 earnings report.

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Best Airline Stock ETF

As we cover in more detail shortly, the most risk-averse way of approaching airline stocks is to diversify as best as you can. This means that you should look at buying a collection of different airline stocks as opposed to investing in one or two. In doing so, you will mitigate the risk of holding an airline stock that fails to cover the pandemic.

Without a doubt, one of the best ways of achieving this goal is to invest in an ETF. At the time of writing, there is just one ETF that focuses exclusively on airline stocks – and that’s the U.S. Global JETS ETF.

best airline stock ETF

Put simply, by making a single investment in this ETF, you will be purchasing 40 of the best airline stocks to buy. The ETF is well diversified across various domestic and international airlines – from all over the world. This includes everything from Southwest, American Airlines, Spirit, and United Airlines to Pegasus, Japan Airlines, Wizz Air, and Singapore Airlines.

Are Airline Stocks a Good Investment?

On the one hand, the airline industry has been hit extremely hard since the pandemic and wider travel restrictions came to fruition. This is fully evident in the complete stock price capitulation across the industry.

However, this does present a number of opportunities to buy airline stocks at a major discount. The key risk here is that there are likely to be a number of large-scale casualties along the way – especially if lockdown and travel restrictions continue throughout 2021.

This is why you need to perform lots of research on your chosen airline stock before taking the plunge. To help point you in the right direction, below we discuss the most important metrics that need to consider in your search for the best airline stocks to buy.

What is the upside potential of the airline stock? 

First and foremost, you need to look at what the potential upside is on your airline stock. This is a relatively systematic process, as you simply need to look at two key metrics:

  • What was the price of the airline stock before it crashed in early 2020?
  • What is the current price of the stock?

Now, once you know the answer to the above two questions, you can then calculate what the upside potential is. To be clear, you are looking to see how much you stand to make should the airline stock get back to pre-pandemic levels. Of course, there is no guarantee that this will happen.

American Airlines Group Inc

So, as you can see from the image above, American Airlines was priced at $28.63 on February 18th, 2020. You can also see that just a month later, the shares hit sub-$10 levels. Nevertheless, the current price of American Airlines stock at the time of writing is $17.82.

This means that to get back to pre-pandemic levels of $28.63, this airline stock would need to increase by just over 65%. Does this offer a good upside potential? Without a doubt it does. But, of course, you also need to consider what risks you will be undertaking on the airline stock before making an investment.

How much risk are you taking by investing in the airline stock?

If you’re a seasoned investor, you’ll know the age-old “risk vs reward” conundrum. That is to say, the more profits you seek, the more risk you should be prepared to take.

In the case of airline stocks, the risks are huge. Sure, there is no doubt that passenger numbers will eventually return to pre-pandemic levels. For many commentators in this industry, that’s a given. However, there is no guarantee that each and every airline will make it through the coronavirus storm financially.

should i buy airline stocks now?

On the contrary, there is every chance that we will see a number of airline bankruptcies before pre-pandemic passenger numbers return. Taking all of this into account, you need to have some sort of understanding of the airline stock’s financial standing.

In particular;

  • What does its balance sheet look like?
  • How much debt does it have?
  • And most importantly, how much cash does the airline stock have to hand?

The final point is the most important, as very few airlines are generating a profit at the moment. Instead, even though they may have planes in the air, low passenger numbers mean that this is being done at a loss. As such, the airline stock must have sufficient cash levels to see it through these turbulent times.

If the airline stock that you are interested in does not have sufficient cash levels, this doesn’t necessarily mean that you should avoid it. Instead, if the airline company has access to a substantial amount of liquidity through financing (at competitive interest rates), this could be enough to see it through the next couple of years.

How was the airline stock performing before the pandemic?

While thus far we have focused on potential gains in terms of getting back to pre-pandemic levels, there are other important metrics at bay. In particular, it’s crucial to look at how the airline stock was performing before the crash of early 2020.

On the one hand, if the airline stock was in an upward trajectory before COVID-19 came to fruition, then this could represent a viable investment. After all, not only do you have the chance to reap the rewards of a recovery, but future growth, too.

For example, budget airline Easyjet – which is listed on the London Stock Exchange, was enjoying a good period of upward momentum before the shares crashed. As we noted earlier, its shares went from a price of 935p in August 2019 to 1,500p just 7 months later. That’s a very attractive upward movement of 60%.

Jetblue stock price

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On the other hand, if the airline stock you are looking to buy was performing poorly before the pandemic, then it goes without saying that you should probably give it a wide berth.

For example, American low-cost carrier JetBlue – which saw its shares drop from $21 to just $6 in March 2020, was struggling before the crash. To illustrate this point, in the three years prior to March 2020, JetBlue shares were also valued at $21 – meaning there was no movement in 36 months of trading.

Which airline stocks are going to go bankrupt?

We should be absolutely clear here – not only are there likely to be several casualties over the next year or so, but according to CNBC, more than 40 airlines have already failed since the pandemic began.

While many of the casualties are small, relatively unknown airlines – some are relatively sizable. This includes Cathay Dragon – a subsidiary of major Hong Kong airline Cathay Pacific.

Then you have Virgin Atlantic in the US which filed for bankruptcy in August 2020, and UK domestic airline Flybe which entered administration in March 2020. Even more alarming is the fact that many ‘major’ airlines, such as those that we have discussed in this article, are inching very close to financial ruin.

catahy pacific stock price

In fact, virtually every airline that is traded on a public exchange is in one way, shape, or form at risk of bankruptcy. Most have little in the way of cash reverses and ever-growing debt levels. Furthermore, a significant number of major airline stocks are relying on external financing. In some cases, at extortionate interest rates.

Taking the above into account, there are two key things to remember in your search for the best airline stocks to buy.

  • Firstly, you should keep your stakes to a minimum. As such, injecting anything more than 5% of your portfolio into airline stocks is asking for trouble.
  • Secondly, it’s probably best to consider a diversification plan. In other words, if you do proceed to invest in the airline industry, you’ll want to select multiple stocks.

For example, by adding at least five companies to your portfolio, you won’t be overexposed to a single airline. Therefore, if one of your airline stock picks does end up folding, the financial impact might not be as devastating – especially if your other selections perform well.

Best Airline Stock Brokers in the UK

So now that we have discussed the best airline stocks to buy – and what metrics need to be considered before making an investment, you then need to think about which stock broker you wish to use.

Not only does your chosen broker need to offer the best airline stocks to buy, but at a competitive commission rate. Plus, you’ll likely want to stick with a share dealing account that supports fractional ownership – which will allow you to trade with small stakes and mitigate your risks.

To save you countless hours of research, below we discuss a selection of UK trading platforms that support the best airline stocks to buy.

1. eToro – Overall Best Broker UK to Buy the Best Airline Stocks

eToro is now one of the largest online brokers in the UK trading scene – with more than 17 million global clients and heaps of liquidity. Most investors using eToro are those with little to no experience of online trading – as the platform is simple and easy to use.

This online broker gives you access to over 2,400 stocks from 17 international markets. In fact, all of the best airline stocks to buy that we have discussed today are accessible at eToro.

Best of all, eToro does not charge any commissions whatsoever, so you can buy your chosen airline stock in a low-cost manner. Additionally, if the airline stock that you wish to buy is listed on the London Stock Exchange, you would ordinarily need to pay a stamp duty tax of 0.5%.

easyjet shares etoro buy

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However, eToro waivers this fee, so you’ll save yourself even more money when using this top-rated broker. Perhaps even more important is that eToro supports fractional shares. For those unaware, this means that you can buy a fraction of one share as opposed to buying a full stock.

This is particularly attractive when searching for the best airline stocks to buy – as you’ll want to keep your stakes to a minimum. At eToro, you can buy your chosen airline stock from just $50 upward  – which is approximately £40. As such, if you were to make a deposit of £400, you could effectively build a diversified portfolio that consists of 10 of the best airline stocks to buy.

eToro copy trading

If you want to diversify even further, eToro supports ETFs – many of which contain airline stocks. You might also find the Copy Trading feature useful if you wish to invest in a passive manner. This allows you to copy the portfolio of a seasoned eToro trade like-for-like, as well as all ongoing positions.

In terms of getting started, you can open an account at eToro in minutes online or via the mobile investment app. The minimum deposit is just $50. You can instantly deposit funds with a debit card, credit card, bank account transfer, or e-wallets like Paypal and Skrill.  Finally, eToro is FCA-regulated and your funds are covered by the FSCS scheme.

Pros:

  • Super user-friendly online broker and trading platform
  • Buy over 2,400 stocks with tight spreads
  • 100% commission-free
  • You can also trade indices, ETFs, cryptocurrencies, and more
  • Deposit funds with a debit/credit card, e-wallet, or bank account
  • Social and copy trading
  • Accepts PayPal
  • Regulated by the FCA, ASIC, and CySEC

Cons:

  • Not suitable for advanced traders that like to perform technical analysis

67% of retail investors lose money trading CFDs at this site

 

2. Libertex – Trade Airline Stock CFDs with ZERO Spread and Leverage

Although eToro is our top-rated platform to buy the best airline stocks, Libertex offers an alternative trading angle. That is to say, Libertex allows you to trade the future price of your chosen airline stocks via CFD instruments.

This means that you can access the market without needing to take ownership. Stock CFDs are an interesting way to speculate on airline shares, not least because Libertex allows you to choose from a buy or sell position.

The latter means that you will be short-selling the stock – meaning that you think the share price will go down. Libertex also allows you to trade airline stock CFDs with leverage. As a UK client, your limits will be capped to 1:5. This does, however, mean that you can trade with five times to amount you have in your Libertex account. 

LIBERTEX trade stock cfds

When it comes to fees and commissions, Libertex is one of the most competitively-priced CFD brokers in the UK. This is because the platform charges zero spreads. For example, Southwest Airlines carries a bid and ask price of $51.96 – so you’re getting wholesale sales.

Although there is a small commission to pay on most financial instruments, this isn’t the case with all markets. For example, a number of airline stock CFDs at Libertex come with a 0% commission. In other cases, you’ll pay just a small fraction of sub-0.1% per slide. 

If you like the sound of trading airline stock CFDs at Libertex, the minimum deposit is just £100. The platform – which has been operational for over two decades, allows you to instantly deposit funds with a debit card, credit card, or e-wallet. Although Libertex isn’t regulated by the FCA, it is licensed by CySEC and authorized to accept UK traders.     

Pros:

  • Zero spread CFD trading
  • Very competitive commissions
  • Good educational resources
  • Long established broker
  • Trade stocks and indices like the Dow Jones
  • Compatible with MT4
  • Great choice of markets

Cons:

  • Only offers CFDs

83% of retail investors lose money trading CFDs at this site.

 

How to Buy Airline Stocks in the UK

So now that we have discussed to best brokers to buy airline stocks, we are now going to show you how to make a purchase in your chosen company from the comfort of your home.

This walkthrough shows you the steps with FCA broker eToro – which offers all of the best airline stocks to buy that we have discussed today – commission-free.

Step 1: Open an Account and Upload ID

As is the case with all FCA-regulated brokers in the UK, the first step is to open an account with eToro. Visit the eToro homepage online or via your mobile web browser and click on the ‘Join Now’ button. If you wish, you can download the eToro stock trading app and trade on your mobile.

eToro sign up

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eToro will now need to collect some personal information from you, which includes:

  • First and Last Name
  • Home Address
  • Date of Birth
  • Mobile Number
  • Email Address
  • National Insurance Number
  • Username and Password

eToro will also need to confirm your UK mobile number. It will do this by sending you a unique code via text message, which you’ll then need to enter to complete the registration process.

Step 2: Confirm Identity

eToro allows you to deposit up to $2,250 (about £1,600) as soon as you open your account. You will at some point need to upload some verification documents. This needs to be done before you can make a withdrawal, so it’s best to quickly do this now.

All you need to do is upload the following two documents:

  • Valid passport or driver’s license
  • Utility bill or bank account statement (issued within the last 3 months)

In most cases, eToro will verify your documents within a few minutes of you uploading them.

Step 3: Make a Deposit

You will now need to make a deposit into your newly created eToro account. The broker requires a minimum deposit of $50 – which is about £145. By meeting the minimum, will allow you to buy four of your chosen airline stocks at $50 each.

You can choose from the following UK payment methods:

  • Debit/Credit Card (Visa, MasterCard, Maestro)
  • Paypal
  • Skrill
  • Neteller
  • UK Bank Transfer

Apart from a standard bank transfer, all other supported deposit types listed above are processed by eToro instantly.

Step 4: Search for an Airline Stock

If you already know which airline stock you wish to buy, the easiest way to make the purchase is to search for it. As you can see from the example below, we are looking to buy Easyjet stocks.

buy airline stocks etoro

67% of retail investors lose money trading CFDs at this site

If you don’t which airline stock you wish to buy, click on the ‘Trade Markets’ button, followed by ‘Stocks’. You can browse the many airline stocks that eToro supports by clicking on the respective exchange (e.g. London Stock Exchange, NYSE, or NASDAQ).

Step 5: Place an Order

Once you click on the ‘Trade’ button next to the airline stock that you wish to invest in, an order form will appear.

Here, you need to enter your stake – which needs to be in US dollars even if the shares are listed on the London Stock Exchange. Once again, the minimum on eToro is $50 per stock trade.

buy airline stocks etoro

To complete the investment, click on the ‘Open Trade’ button.

Note: If you are buying an airline stock that is listed outside of the UK, then you might see that the confirmation button says “Set Order”. This means that the respective exchange is closed, so eToro will complete your trade when it reopens. 

Conclusion

In summary, by investing in the best airline stocks to buy, both the risks and potential rewards are high. Regarding the former, there is every chance that we will see a number of casualties by year-end – with virtually all airlines burning through cash reserves on a day-to-day basis.

On the flip side, the upside potential on airline stocks could be high – especially on those that were performing well before the pandemic. The most important thing is that you keep your stakes modest and that you diversify well.

If you are ready to invest in your chosen airline stock right now, eToro allows you to buy shares on a 100% commission-free basis. Getting started takes minutes, you can instantly deposit funds with a debit/credit card, and best of all – there is no stamp duty to pay on UK-listed stocks!

eToro – Best Broker to Buy Airline Stocks UK with 0% Commission

67% of retail investor accounts lose money when trading CFDs with this provider.

FAQs

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About Kane Pepi PRO INVESTOR

Kane Pepi is a British researcher and writer that specializes in finance, financial crime, and blockchain technology. Now based in Malta, Kane writes for a number of platforms in the online domain. In particular, Kane is skilled at explaining complex financial subjects in a user-friendly manner. Academically, Kane holds a Bachelor’s Degree in Finance, a Master’s Degree in Financial Crime, and he is currently engaged in a Doctorate Degree researching the money laundering threats of the blockchain economy. Kane is also behind peer-reviewed publications - which includes an in-depth study into the relationship between money laundering and UK bookmakers. You will also find Kane’s material at websites such as MoneyCheck, the Motley Fool, InsideBitcoins, Blockonomi, Learnbonds, and the Malta Association of Compliance Officers.

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