‘All Airlines Are Poised to Bounce’: Citi Makes the Case for Buying These 2 Airline Stocks Now

The airline industry struggled over the past year, with multiple headwinds weighing on demand. Operational disruptions, severe weather, shifting tariff policies, and – most recently – the government shutdown affecting the air traffic control system all contributed to weaker performance.

Looking ahead to 2026, however, Citi analyst John Godyn sees conditions improving and expects a broad recovery across the sector. Still, not all airlines are positioned equally. Godyn highlights a group he refers to as the “supermajors” – the largest legacy carriers with entrenched advantages, including strong positions in key hubs, leadership on long-haul international routes, extensive alliance and joint-venture networks, and well-established loyalty programs. In Godyn’s view, these strengths should allow this group to be among the primary beneficiaries of the industry’s rebound.

 “We believe the setup is positive for an elongated mid-cycle beginning in 2026. If we are right, all airlines are poised to bounce. But we also argue that the biggest beneficiaries through the cycle are likely to be the supermajors, where risk/reward is most favorable relative to the rest, even if our directional view on the cycle proves wrong. By contrast, we see the legacy low-cost carriers (LLCCs) as the relative underperformers through the cycle. We are positively biased toward niche carriers and will revisit our ratings on a case-by-case basis,” Godyn explained.

The Citi’s airline expert goes on to recommend two airline stocks in particular, as shares that investors should buy now. We used the TipRanks database to see how the rest of the Street views them. Let’s dive in.

American Airlines Group (AAL)

The first stock on our list, American Airlines Group, is the parent company of American Airlines, one of the world’s largest commercial air carriers by number of passengers carried and by annual revenue. The company operates a fleet of approximately 1,000 modern airliners, from a variety of manufacturers: Airbus, Boeing, Bombardier, and Embraer. In addition, the company has nearly 300 aircraft on order, an impressive investment in keeping the fleet up to date.

American, operating in conjunction with its American Eagle regional partner air routes, offers thousands of flights every day to more than 350 destinations in over 60 countries around the world. The company has hubs in such major air travel destinations as New York City, Washington DC, Miami, LA, Chicago, and Philadelphia. These are supplemented by hubs in Charlotte, Phoenix, and Dallas-Fort Worth, where it maintains its headquarters.

In addition to its own operations, American Airlines is a member of the oneworld Alliance, a leading airline alliance in the world’s travel sector. Through the alliance, American cooperates with such major airlines as British Airways, Cathay Pacific Airways, and Qantas Airways; the airlines share facilities and gate privileges, provide support for each other’s passengers, and together provide travel options to over 900 destinations worldwide.

In 3Q25, the company reported $13.7 billion in quarterly revenues – a figure that marked a Q3 record for the company and beat the forecast by $62.9 million. At the same time, the company realized a net loss in the quarter of 17 cents per share, which was 11 cents per share better than had been expected. We should also note that AAL shares are down this year, having lost approximately 15% in 2025.

Despite the share price decline, Citi airline analyst John Godyn sees plenty of underlying strengths here. He writes of American, “Post COVID, poor execution at AAL led to lost corporate and premium travel market share, which led investors to question whether AAL was somehow structurally impaired vs. supermajor peers DAL and UAL, but management has increasingly put in plans to regain share. We believe that risks of structural impairment are overstated and that if AAL is able to demonstrate company-specific momentum then the stock offers the most significant upside potential among the supermajors. Our view in AAL’s upside potential is rooted in the following: (1) Sales and distribution ‘reset’ step in the right direction, (2) Premium hard-product refresh accelerating, (3) International expansion on a lower base can move the needle quickly, (4) Oneworld Alliance a major strategic asset, (5) Criticism of inferiority of network overblown, (6) Unique loyalty plan revenue opportunity, (7) Renewed focus on operational reliability, and (8) Productivity initiatives favorably impacting CASM ex-fuel profile further enhanced by labor cost visibility through 2027.”

Following from these comments, Godyn rates American Airlines’ stock as a Buy, with a price target of $19 that suggests a one-year upside potential of 28%. (To watch Godyn’s track record, click here)

Overall, AAL stock is rated as a Moderate Buy among Wall Street’s analysts, based on 13 recent reviews that include 5 Buys, 7 Holds and 1 Sell. The shares are priced at $14.81 and the $15 average target price implies that the stock will stay rangebound for the time being. (See AAL stock forecast)

Alaska Air Group (ALK)

The second airline stock that Citi recommends is Alaska Air Group, best known for its operations on the West Coast of North America. Alaska Air Group has been in business since 1985 and keeps its headquarters at SeaTac, the Seattle suburb that is home to the Seattle-Tacoma International Airport. The company, like many large airlines, is a holding firm; its subsidiaries include Alaska Airlines, Hawaiian Airlines, Horizon Air, and McGee Air Services. Alaska Air flies to more than 140 destinations in North America, Central America, across the Pacific, and in Asia. Like American Airlines above, Alaska Air is a member of the oneworld Alliance, and uses that membership to expand the destinations available to its passengers.

Alaska Air operates a modern fleet of commercial passenger jets, mainly various models of the Boeing 737 family. Of 408 aircraft in the company’s fleet, 244 are 737 variants, 89 are short-haul Embraer 175 jets, and 34 are Airbus A330 models. The company operates a variety of additional aircraft, including 3 air freighters for cargo runs.

While Alaska Air is not considered one of the world’s largest airlines, it is still an impressive player in the industry, operating at a level well above the regional carriers, and boasting a market cap of nearly $5.8 billion. The company’s strong industry position is bolstered by its large destination list and the relatively young average age of its aircraft – the Boeing 737 variants that make up the backbone of its fleet average less than 10 years old, while the Embraer short-haul jets are less than 7 years old – favorable comparisons to the industry average of approximately 15 years.

Alaska Air reported a record-level quarterly revenue in 3Q25, the last reported period. The top line in the quarter came to nearly $3.8 billion, up 23% year-over-year and beating the estimates by over $9 million. At its bottom line, Alaska Air reported earnings of $1.05 per share by non-GAAP measures, missing the forecast by a nickel per share. While shares in ALK have been ticking up in recent weeks, the stock is still down by 23% for the year-to-date.

Once again Citi analyst John Godyn is not worried about the drop in share price. He sees Alaska Air as a potentially strong player in the industry, one that may be capable of entering the highest ranks. Godyn says of this airline stock, “Although ALK is not a supermajor, we see it as the most supermajor-like of the rest of the carriers and management’s strategic plan clearly leans in the direction of further developing supermajor strengths if the company is able to execute. We believe the recent pullback in shares creates an unusual opportunity to build a long-term position at what may very well prove to be near tactical lows. Our view is rooted in the following investment positives: (1) Consensus has backed away but we believe Alaska’s bold Accelerate target of >$10/share in EPS in 2027 is still possible, (2) Supermajor-like premium revenue strategy driving RASM momentum, (3) The loyalty plan is becoming a more meaningful contributor to revenue, (4) 2026 being a synergy capture inflection year on the back of 2024’s purchase of HA, (5) Disciplined focus on margin and ROIC, (6) ALK entering a phase of rapid balance sheet deleveraging, and (7) Uniquely attractive valuation vs. supermajors.”

Quantifying his stance here, Godyn rates ALK as a Buy, which he backs with a $61 price target. His price target implies a one-year potential gain for the shares of 23%.

This stock boasts a unanimous Strong Buy consensus rating from the Street’s analysts, based on 10 recent positive reviews. The stock is currently trading for $49.65 and its $68.8 average price target points toward a 12-month gain of 38.5%. (See ALK stock forecast)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.