r/investing
Im curious sbout investing in the airline opportunity long term
A conservative beginner asks about the long-term viability and responsible ways to invest in airline stocks like UAL and LUV.
- Long-term growth potential in air travel and tourism.
- High volatility in the sector due to fuel price fluctuations.
Ive recently started seriously looking into investing for wealth generation, and its really opened up something inside me sbout how much I enjoy learning about investing / stocks / bonds / ETFs / etc...im pretty conservative and doing all the standard and prudent things as I work towards building wealth for my families future.
I was just curious to know how people look at the future of air travel and long term growth. Honestly, it just started out because im kinda a nerd about planes and flying / travel. I understand that it can be highly volatile with fuel prices, but are there folks who are long term investors in companies like UAL / DEL / LUV / etc? Or is there a non gambling way to invest in companies like this or other travel companies like hotels that makes sense and is still responsible? Honestly, id like exposure to individual travel giants because i enjoy them, but im absolutely not gonna go all in to jeopardize my families future
I worked at JetBlue for years and whenever anyone asked me if investing in airlines was a good idea I’d tell them never to do it. All airlines either eventually merger or go bankrupt. Airline profits are non existent most years and even if you have a company that makes a bunch of good decisions which return value to investors, they end up taking it all back in later bad decisions (see LUV). If you want to invest in aviation and air travel invest in a company like airbus or Boeing. The airline business itself is probably one of the least investable industries around
This.
When my mother was born, my grandfather bought a bunch of airline stocks for her as an investment. When she was old enough to cash them in, not only was the airline out of business, but nobody even remembered it.
And now we've had at least two airlines go bankrupt so far this year.
OP, if you like to throw away money, I'm sure there's better ways to do it.
Thinking like this is highly likely to end up a waste of time and underperforming a simple low cost highly diversified index fund.
Right, thsts why im thinking about it as completely as a side project / hobby...like less thsn 5% of any portfolio
No. You invest to make money not because you like something and it's a hobby and it makes you feel good. Does not matter . Even if it's less than 5% if it's a bad investment it's a bad investment, just stick your money in a low cost investment fund ,that's it. If the airline industry was booming and was a good investment then that would be a different matter but it is not so why invest?
I'm going to go the other way from the other guy and say just go for it if it's just ~1% of your overall investments. Any losses probably won't break your bank, and if that scratches your itch for wanting some Fun(tm) in your investments then that will have behavioral benefits for the rest of your investments.
You'll also gain real experience one way or another, that's valuable on its own.
$JETS fund is a basket of airlines, but be warned that airlines are a difficult business with lots of compition, low margins and vulnerable to high oil prices. There's likely better opportunities out there, always have been.
This industry constantly loses money. It's one thing to enjoy something, and another to invest in it
Airline stocks aren't the answer to generational wealth
Airlines go bust fairly often (in comparison) leaving stockholders as bag holders. Way too many other places to invest. Just cause you like planes doesn’t make it financially smart.
Thinking of investing in airlines during a growing jet fuel shortage, with an ongoing Middle East conflict is certainly a choice. Consider how sensitive airlines are to everything from commodities, recessions, pandemics etc. two of which are on the immediate horizon.
If you look at the stock charts for any of the major carriers, they're pretty anaemic in terms of growth. If you're looking for wealth generation, airlines would be one of the last industries I'd look at myself.
Airlines are a gamble because their growth doesn't come from actual air travel and more from their loyalty programs.
Thanks so muchbfor your well reasoned reply...i really do appreciate it
Yea, id rather put it on black
As someone who's been down this road - don't. Airlines are capital-intensive death traps with razor-thin margins and union headaches. Even the 'good' ones like Southwest have destroyed shareholder value over decades. The only people who make money in airlines are the executives and the banks that restructure them after bankruptcy. If you absolutely must scratch that itch, buy an airline ETF like JETS and cap it at 2% of your portfolio. Better yet, just buy the plane tickets and enjoy the flight. Your portfolio will thank you.