Airline stocks are positioned to emerge as top performers in the 2026 New Year’s stock market, buoyed by optimistic forecasts for global airline performance and the anticipated resolution of aircraft supply shortages. A favorable exchange rate environment could potentially mark this year as one of significant growth in the aviation sector, often referred to as the “three beats of growth.”
A pivotal element contributing to this optimism is the expected normalization in aircraft supply, particularly from Boeing. According to the International Air Transport Association (IATA), the global aviation industry is projected to achieve a net profit of $41 billion this year, setting a new record. Boeing’s planned delivery of around 700 aircraft this year represents a 23% increase compared to last year’s figures. Competitor Airbus is also on track to deliver approximately 900 aircraft, which is a 14% increase from 790 last year. This influx of aircraft is crucial for airlines that have faced restrictions on expanding routes due to lack of available planes.
As a testament to market confidence, Boeing’s stock price has seen a 26% year-on-year rise as of the end of last month. Tigress Financial, a global investment bank, has raised its target price for Boeing shares by 27% to $275, reflecting strong expectations for the company’s continued growth this year.
Major U.S. airlines have demonstrated notable recovery since the latter half of the previous year, overcoming uncertainties linked to former administration policies. The big three airlines—Delta, American, and United—reported impressive third-quarter earnings. Delta, for instance, recorded a 4.1% increase in revenue, totaling $15.19 billion, alongside a significant 23.5% surge in operating profit to $1.69 billion, leading to a 34% rise in its stock price over the past six months.
In a favorable development, the global investment bank TD Cowen has uplifted its target price for United Airlines by 12%, suggesting that the aviation industry is generally undervalued. The US Global Jet ETF, which focuses on global aviation stocks, has increased by an impressive 64% since its low point in April. The strong demand for year-end travel is expected to further enhance airline performances in the fourth quarter.
Additionally, the upcoming June North American World Cup is seen as a positive influence, with IATA predicting that the influx of tourists will boost reservation demand in the first quarter of the year.
The domestic aviation sector in South Korea is also poised for growth, with projections indicating a 5-10% increase in passenger numbers if the post-pandemic surge in overseas travel continues and routes to China normalize. Notably, Korean Air could strengthen its market position through the planned integration with Asiana Airlines, which would streamline operations and enhance its competitive edge.
Financial institutions anticipate that major airline stocks like Korean Air will greatly benefit from a stable won-dollar exchange rate. Reports suggest that Korean Air could realize approximately 48 billion won in foreign currency valuation gains and losses for every 10 won change in exchange rates, making a strong won advantageous for its non-operating profits. Hana Securities has recently increased its target price for Korean Air by 23%, while KB Securities maintains a positive outlook, anticipating boosted profits following the merger amidst changing geopolitical dynamics.
Overall, the outlook for the airline industry is promising, with signs of recovery and growth visible on multiple fronts.