3 Airline Stocks to Sell in September Before They Crash And Burn

Stocks to sell

If you’re wondering what airline stocks to sell this month, look no further. The airline industry remains in a tricky spot. On one hand, the industry is recovering from the ravages of the Covid-19 pandemic when all carriers had their operations completely shut down for a time and then were forced to operate for an extended period at reduced capacity. The pandemic cost the global airline industry an estimated $168 billion in financial losses in 2020 alone. The road back has been difficult for nearly all airlines, but particularly painful for some carriers. Weather problems last winter and negotiations with pilots unions and other labor groups this year have further pressured airlines. This has lead to dramatic cost increases as some pilots managed to wrangle pay raises of more than 30%. Add in volatile fuel prices and a slowing economy that is expected to negatively impact travel demand in this year’s second half, and it hasn’t been a great time to own airline stocks, with some faring a lot worse than others. Here are three airline stocks to sell in September before they crash and burn.

Southwest Airlines (LUV)

Source: Markus Mainka / Shutterstock.com

It’s been a difficult year for Southwest Airlines (NYSE:LUV). In July alone, the company’s share price fell more than 15%, bringing its five year decline to nearly 50%. The carrier has struggled mightily coming out of the Covid-19 pandemic. The most recent plunge in LUV stock came after the company reported dismal second-quarter financial results, the highlight of which was that the company’s revenue decreased nearly 10% from a year earlier. Management forecasts a further revenue decline of 7% in the current third quarter of the year.

Southwest executives blame the slumping revenues on rising costs, particularly for labor and fuel, with both remaining well above pre-pandemic 2019 levels. The airline’s profitability is also under pressure. Southwest Airlines hasn’t been the same since a system-wide meltdown last December during the busy holiday travel season led to a Q4 2022 loss of $220 million. Severe winter weather and a crash in its computer system caused Southwest to cancel more than 16,000 flights between Dec. 21 and 31.

If all of this wasn’t bad enough, Southwest Airlines is also dealing with labor unrest among its unionized pilots, with several rotating picket lines taking place despite the company offering the pilots a 46% pay raise through 2027.

JetBlue Airways (JBLU)

jetblue (JBLU) airplane on a runway

Source: Roman Tiraspolsky / Shutterstock.com

JetBlue Airways (NASDAQ:JBLU) has been in the doghouse with investors ever since the company announced in August that it doesn’t expect to post a profit in Q3 of this year. The carrier also lowered its full-year earnings guidance to between 5 cents and 40 cents per share, lower than previous guidance of 70 cents to $1 a share. JetBlue’s brass said the cut to the forward guidance was due to softening domestic demand in the U.S. However, the company’s $3.8 billion takeover of Spirit Airlines is running a gauntlet of regulatory approvals and has yet to be greenlit.

The U.S. Justice Department has attempted to block the Spirit acquisition. JetBlue is working to remedy the situation. But the deal has not been finalized amid mounting concerns over the impact it could have on domestic competition in the U.S. aviation sector. For Q3, JetBlue said it expects a loss of 20 cents to break-even. Wall Street analysts had forecast EPS of 40 cents. Revenue forecasts fall between 4% and 8% year-over-year. JBLU stock is down nearly 10% this year and down 69% over five years. Time to sell.

Alaska Air Group (ALK)

Alaska Airlines (ALK) aircraft is airborne as it departs Los Angeles International Airport

Source: Philip Pilosian / Shutterstock.com

Alaska Air Group (NYSE:ALK) managed to report a strong Q2 print, beating Wall Street forecasts on the top and bottom lines. However, ALK stock took a hit on soft guidance for Q3. Like the other names on this top airline stocks to sell list, Alaska Air Group sees a pullback in domestic travel demand amid signs that the U.S. economy is succumbing to higher interest rates and beginning to slow. The company said it expects its Q3 revenue to only rise about 3% from the previous year. That was not what investors wanted to hear.

Additionally, there are rumors that Alaska Air Group could be removed from the benchmark S&P 500 index because its market capitalization of just over $5 billion is below the index’s minimum threshold of $12.7 billion. Removal from the S&P 500 index would also lead to ALK stock being dropped from numerous exchange-traded funds and mutual funds that track the index’s performance. That could be bad news for the share price going forward. Already, ALK stock is down 5% over the last 12 months and down nearly 40% through five years.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.