Airline Stocks Are Struggling. That Makes This One a Long-Term Buy.

Airline stocks are having a challenging year as oil prices remain elevated. (Spencer Platt/Getty Images)

Key Points

• Ryanair cut its fiscal year 2027 passenger traffic target to 214 million to reduce its exposure to unhedged jet fuel during the winter.
• The airline is 80% hedged on jet fuel for the current fiscal year, while some of its less-hedged competitors are struggling with unit costs.
• Analysts say Ryanair is positioned to gain market share from smaller, weaker competitors during a tough winter season.

If you don’t mind a bit of turbulence, Ryanair could be the airline stock to buy.

The entire sector has been going through a rough patch recently as high oil prices—the stocks’ arch nemesis this year—have persisted. The U.S. Global Jets ETF is down 13% since the start of July, while Brent crude futures are up 33% over the same period.

Ryanair’s American depositary receipts have fallen 15% this quarter and are now down 23% this year—the Europe-listed stock is also down 23% in 2026. Southwest Airlines and American Airlines are down more than 20% since the start of July, United Airlines is down 18%, and Delta Air Lines has fallen 14%.

The Irish low-cost carrier cut its passenger traffic target for the fiscal year 2027 last week to reduce the company’s exposure to “unhedged jet fuel during the unprofitable winter schedule.” It now expects 214 million passengers, down from 216 million, through March 31, 2027.

Ryanair is 80% hedged on jet fuel this fiscal year and said “some less-well hedged competitors will struggle to maintain capacity or even survive this coming winter season.”

And that’s where the long-term case for Ryanair stock comes in. The European low-cost carrier’s dominance means it stands to gain market share when times get tough, leaving it primed to benefit when the cloudy skies begin to clear.

Or as Citi analyst Conor Dwyer put it: “While hurting this year’s profits, a tough winter would weigh much more heavily on the long tail of smaller airlines operating across Ryanair’s network with weaker balance sheets, thinner margins, and less fuel hedging, ultimately enhancing its competitive position,” he said in a note last month.

Dwyer has a price target of €31.50 on the European-listed stock, a 38% upside to Monday’s price. The shares move largely in tandem with the ADRs.

CEO Michael O’Leary said Ryanair’s competitors were “struggling” with unit costs. “Their costs are escalating wildly. And the cost gap between us is getting wider and wider,” he said during the company’s fiscal first-quarter earnings call in July.

That means Ryanair won’t have to hike fares quite as much as its rivals, leaving it likely to hoover up more market share in the low-cost sector.

Barclays analyst Andrew Lobbenberg said he could understand why short-term focused investors may take a cautious approach to Ryanair. “But for investors with long term time horizons, we think building a position in Ryanair is rational,” he wrote in a note last week.

He highlighted five left-field long-term themes set to benefit Ryanair, beyond well-established reasons including its cost advantage to peers, superior balance sheet, and fleet modernization benefits.

It includes a move away from environmental regulation in Europe, the possibility that Ryanair launched a holidays business—something it has repeatedly said it doesn’t want to do—and its strategy to insource a growing number of functions in contrast to its peers.

The analysts added that Ryanair may be set to pre-fund more of its aircraft deliveries in the future, freeing up more cash for shareholder returns, while CEO Michael O’Leary’s pay package leaves him strongly motivated to optimize the share price for July 2028.

Barclays has an Overweight rating on the European-listed stock with a price target of €28.50, a 25% upside to Monday’s price.

Write to Callum Keown at callum.keown@dowjones.com

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