Are Airline Stocks a Good Buy in December 2023?

Airline stocks have had a rough few years, with high demand seriously picking up. But this has actually created more problems, not less.

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Airline stocks were flying high before the pandemic hit, crashing down for obvious reasons. Now, these companies have seen improvements that have brought in record revenue, bookings, and profitability. But can this last?

Today, we’re going to look at airline stocks to see if they remain a good investment for today’s investors. What’s more, which is the best buy on the TSX today?

Not on time

A new report found recently that Canada’s biggest airlines ranked last for on-time performance across all airlines in North America. The largest companies were on time about 71% of the time, which was lower than the average of 80% across the rest of North America.

Moreover, it was the lowest-performing region tracked by the report. That came lower than Europe, Latin America, Africa, and the Middle East. Air Canada (TSX:AC) was found to have nearly 28% of its flights arrive late in October, with Onex (TSX:ONEX) owned WestJet at nearly 29% for the month. Late was defined as coming at least 15 minutes after the arrival time.

While this is an improvement from post-pandemic issues, there were numerous issues that cropped up for the companies. Bad weather, lower staff, and high demand all put pressure on recovery times. Even so, isn’t that something everyone is dealing with?

Improvements to come?

These companies have come under high pressure to make improvements now and in the future — all while dealing with other issues such as labour strikes and complaints from people with disabilities about their treatment by Air Canada, as an example.

So, with capacity already stretched in the sector, improvements need to be made across the board. From more baggage handlers and pilots to on-time arrivals and a streamlined approach, Air Canada stock and WestJet stock certainly have many issues they will continue to face.

The question is, will it be on time? While demand has remained high, it’s predicted that the next year may see that demand lessen. Canadians and consumers around the world have cut back, and that could, of course, bleed into leisure travel. So, what should investors do?

Bottom line

Right now, airline stocks don’t exactly look like the best option for a buy right now. These companies have so many issues up in the air (pun intended). And these will likely turn into larger issues when post-pandemic demand starts to lessen.

Air Canada stock and WestJet stock will need to find a way to set themselves apart from the rest. This will likely be to double down on what they’ve been known for all along rather than trying something new. Further, they could reward loyal customers in ways that help their bottom line to keep demand up.

For now, investors may want to watch and wait. Air Canada stock is currently down 28% from 52-week highs as of writing, for example. And that doesn’t look like it’s going to change overnight, even with record-setting results. And with no dividend to reward you in the meantime, I would certainly wait before getting back into airline stocks on the TSX today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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