Which US Airline Stocks Could Benefit from the Government Shutdown Recovery?

Following the conclusion of the longest 43-day government shutdown in US history, aviation stocks are capturing investor attention with notable gains across the sector. The operational disruptions that plagued the industry—including flight cancellations, scheduling conflicts, reduced passenger demand, and crew availability issues—are now clearing, creating a window of opportunity to reassess portfolio positioning in airline equities.

International Carriers Emerging as Sector Leaders

While the broader Zacks Transportation-Airline Industry remains in the lower quartile among all tracked sectors, a divergence has emerged between domestic operators and their international counterparts. Foreign-based airlines with significant US route networks stand to benefit as traffic patterns normalize.

LATAM Airlines Group [LTM] has demonstrated exceptional momentum year-to-date with a +65% rally, establishing itself as a clear market leader. As Latin America’s primary airline operator, LTM carries a Zacks Rank #2 (Buy) designation and has substantially outpaced the industry’s +6% YTD performance. Meanwhile, International Consolidated Airlines Group [ICAGY], the parent of British Airways, has appreciated nearly 40% during 2025 and currently trades near its 52-week high of $11 per share, holding a Zacks Rank #3 (Hold) rating.

US Carriers: A Mixed Recovery Picture

Among domestic operators, SkyWest [SKYW] stands alongside LATAM as one of the few stocks earning a buy recommendation from Zacks analysts. The regional carrier, which predominantly serves Midwest and Western US markets, has benefited from improving earnings expectations. Over the past month, FY25 EPS estimates have climbed 4% to $10.33, while FY26 projections have surged 7% to $11.08, reflecting market confidence in its recovery trajectory.

The two largest US carriers present compelling but different risk-reward profiles. United Airlines [UAL] and Delta Air Lines [DAL] both command Zacks Rank #3 (Hold) assessments, though upside potential exists given their steady earnings revision trends. Both carriers maintain advantages in international capacity and operational margins, positioning them favorably for post-disruption recovery. Trading valuations remain reasonable at approximately 10X forward earnings and under 1X forward sales—in line with broader industry multiples—making them relatively attractive entry points.

Stocks to Bypass

The current environment has created clearcut avoidance candidates. Alaska Air Group [ALK] and Sun Country Airlines [SNCY], a Minnesota-based carrier operating across US routes plus Latin America and Caribbean destinations, both carry Zacks Rank #5 (Strong Sell) designations. Combined with six additional stocks holding Rank #4 (Sell) ratings, these equities reflect deteriorating earnings forecasts and represent higher risk in the near term.

As the US aviation industry transitions from crisis recovery to normalized operations, selective positioning in higher-quality operators with improving fundamentals appears prudent over broader sector exposure.