The Motley Fool

Are airline stocks cheap for 2022?

Aerial shot showing an aircraft shadow flying over an idyllic beach
Image source: Getty Images

It’s no secret that airline stocks have been hammered over the past couple of years (thanks a lot, Covid-19). I reckon 2022 is going to be one of renaissance for the airline industry, though. I think some tidy profits are up for grabs from investing in what are, from my viewpoint, cheap airline stocks. 

An uplift in airline share prices can already be seen since the turn of the New Year, with IAG up around 12%, Easyjet 11%, and Wizz Air 13%, at the time of writing. Personally, I think there is scope for further movement upwards and so I’m pondering which airline stocks will fit well into my portfolio.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Why I think airline stocks still look cheap

There seems to be an upbeat mood around not just the UK but Europe in general at the moment. The potential for disaster promised by the Omicron variant hasn’t materialised and I certainly hope that will remain the case. This is good news for the markets, of course, with the FTSE 100 easing nicely into 2022.

I’m strongly of the view that stocks for companies in leisure and travel are going to do well this coming year, predicated on the idea that we’ve seen the worst of Covid-19.

I don’t want to jump the gun of course. I appreciate that government advice around Europe is that we’re still in the midst of a pandemic, and that we shouldn’t count our chickens. But really, do you think we’re going back into full scale lockdown any time soon? I know I don’t think that. 

Travel stocks – and in particular airline stocks – look like a cheap investing opportunity to me. I’ve already written positively about IAG elsewhere, but my optimism from that article extends to the general airline industry.

Vaccine take-up is pretty high right across Europe. This safer environment helps to encourage more international travel. Furthermore, when I reflect on my own experience of travelling internationally during the pandemic I know the passenger experience has improved immeasurably over the last six months or so.

Improved customer experience

During the Christmas period I flew with Aer Lingus, a renowned brand under the IAG banner, and I didn’t have a moment of delay or trouble. Like other passengers I was encouraged to use the ‘Verifly’ app. This ensured I had cleared all Covid-19 checks before I got to the airport. The in-airport experience was great as a consequence. It certainly wasn’t chaotic like when travelling throughout much of 2021.

I know this is only my own personal experience, but when combined with the anecdotal evidence of friends it does suggest that airlines are learning and adapting to customer needs. This is great to see, and I think it will help encourage increased passenger numbers.

When I align the improved customer experience with my belief that more people are simply going to want to travel again in droves in 2022, I can’t help but think airline stocks remain cheap. The question for me now is which particular stock do I want to add to my portfolio!  

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

Garry McGibbon has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.