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2 "Cheap for a Reason" Airline Stocks That May Be Worth the Risk

Reported by Chris Markoch. Article Posted: 9/16/2026.

At a time when many technology stocks are expensive, some investors are looking to rotate into more attractive (that is, cheaper) stocks that may offer greater upside. That’s why airline stocks may be attracting attention. Two of the most popular stocks in the sector look cheap based on their price-to-earnings (P/E) ratios relative to the broader market.

But do they represent good value? After all, stocks are sometimes cheap for a reason, and that’s particularly true of airline stocks. Even when they’re not facing significant headwinds, airline stocks can be among the most difficult investments to own.

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In fact, many investors—both retail and institutional—avoid airline stocks at all costs. Jet fuel costs create volatility, and consumer demand can be cyclical. Those are just two reasons why airline stocks often have tight margins.

All of which is to say that it’s important to look beyond airline stock valuations.

This isn’t an article that’s going to make the case that “this time it’s different.” The reasons airline stocks may not be good investments remain in place. However, in the current economic environment, there may be a case for owning two airline stocks.

Delta's Hedge Advantage Holds Up

Delta Air Lines (NYSE: DAL) is frequently mentioned as the airline stock that even sector skeptics could own. In the current environment, the company’s ability to hedge its fuel costs helps offset the rising cost of jet fuel.

The company’s Q2 2026 earnings report made a convincing case for investors. The airline reported record quarterly revenue of $17.7 billion, an 18.7% year-over-year (YOY) increase. It posted an operating margin of 9%, beating guidance.

Despite rising jet fuel costs, Delta affirmed its full-year guidance, which included free cash flow of $3 billion to $4 billion. It also expects to return to earnings growth in the second half of the year.

The airline attributes this confidence to strong, broad-based demand, particularly in its premium, loyalty and corporate segments.

This comes at a time when higher fuel costs, in particular, make it more difficult for low-cost carriers to undercut Delta on price.

DAL is up about 14% in 2026, outperforming the S&P 500’s return of around 10.5% over the same period. However, the stock is trading near the middle of its 52-week range and approximately 25% below its consensus analyst price target of $98.84.

With all that said, DAL trades at around 13 times earnings. While that’s a discount to the broader market, it’s a premium to the stock’s historical average.

United Is Making the Skeptics' Job Harder Too

United Airlines (NASDAQ: UAL) tells a story similar to Delta’s, with one key difference: United absorbed a larger fuel-cost hit and still raised its guidance.

United’s Q2 2026 revenue rose 16% YOY to $17.7 billion, matching Delta’s top-line growth almost dollar for dollar.

Adjusted earnings per share came in at $1.99, beating consensus estimates by roughly 6%.

Net income actually fell year over year, driven by a $2.3 billion increase in fuel costs. That’s the clearest reminder that the sector’s core vulnerability hasn’t gone away.

However, despite rising fuel costs, United raised its full-year adjusted earnings per share (EPS) guidance to a range of $9 to $11. The company pointed to premium-cabin demand, loyalty-program growth and operational reliability—reflected in its best on-time Q2 departure rate since 2021—as offsets to higher jet fuel costs.

Still, analysts remain wary. In the past two weeks, both Barclays (to $160 from $175) and UBS (to $137 from $153) trimmed their price targets, even as both firms maintained Buy ratings.

UAL trades at a P/E ratio of under 10 times, a steeper discount to the market than Delta’s. Its consensus price target of $155.91 implies 47% upside, nearly double Delta’s upside in percentage terms.

UAL is down about 15% over the past 30 days, pushing it near the middle of its 52-week range. That means the valuation gap reflects a stock that has fallen from its high and still looks statistically cheap.

The combination—a stock trading well below where analysts, even those growing more cautious, still see fair value; a recent decline; and fundamentals that don’t obviously justify the drop—makes this the clearest example in this piece of the market pricing perception ahead of substance.

The Case Isn't "Buy Airlines"—It's Narrower Than That

Delta and United make similar arguments from different angles: disciplined capacity, resilient premium demand and hedging or scale advantages that, for now, are outpacing fuel-cost inflation. Neither story erases the reasons airlines trade at a structural discount. They still have thin margins, cyclical demand and a cost structure that can be upended by a single quarter of higher oil prices.

But with DAL and UAL trading significantly below their consensus price targets and posting solid fundamentals, is either stock worth owning?

United is the sharper test case. A company that beats earnings, raises guidance and still sees its stock fall isn’t being penalized for weak execution. Rather, it’s being penalized because the market is bracing for the next fuel shock, regardless of what the numbers say.

That’s not proof that the stock is mispriced; skepticism about airline earnings quality has been earned over decades. But it is a real-time example of a “cheap for a reason” stock where the reason is increasingly driven by sentiment rather than the balance sheet. Whether that gap closes depends less on investor mood than on something airlines have never fully controlled: the price of jet fuel.