It has been a difficult year for the major airlines, as their stock prices have been dropping in this challenging economic environment. On top of that, a series of airline crashes and accidents have rattled consumers, while confidence has been further shaken by proposed Federal Aviation Administration budget cuts.
This week, before presenting at the J.P. Morgan Industrials Conference on Tuesday, both Delta Air Lines (NYSE:DAL) and American Airlines (NASDAQ:AAL) lowered their revenue projections.
On Tuesday, American lowered its revenue guidance to flat year over year, from the previous 3% to 5% increase. It also reduced its net loss in Q1 to 60 cents to 80 cents per share, from the previous net loss of 20 cents to 40 cents per share.
“Since the Company’s initial first-quarter guidance issued on January 23, 2025, the revenue environment has been weaker than initially expected due to the impact of Flight 5342 and softness in the domestic leisure segment, primarily in March,” the SEC filing said.
Delta also lowered its revenue guidance to 3% to 4% growth, down from 7% to 9% growth. Earnings projections were dropped to 30 cents to 50 cents per share, from 70 cents to $1 per share. Delta cited the “recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in domestic demand.”
Both stocks were moving lower this week, adding to their losses. Year-to-date, Delta stock has dropped about 16% while American is off 28%. And they are not alone as most airline stocks are down.
But there is one airline stock that has vastly outperformed, AerSale Corp. (NASDAQ:ASLE). Here’s why.
Why AerSale stock is surging
AerSale has been an outlier in the airline industry, with its stock up some 26% YTD to around $8.30 per share.
It is not an airline, but it does service the industry, providing airlines and jet manufacturers, like Boeing (NYSE:BA), Airbus (OTC:EADSY)and McDonnell Douglas, with aftermarket services, parts, and products to help them save money. In addition, its diverse client base also includes government and defense contractors, and corporations. At a time when the industry is struggling, AerSale has provided a valuable service.
The company released Q4 and 2024 earnings last week, reporting a 1% increase in revenue to $94.7 million in the quarter and a 3% jump to $345 million for the full year.
Also, in Q4, it generated net income of $2.7 million, up from a $2.7 million net loss in the same quarter a year ago. For the full year the firm made $5.8 million, up from a $5.5 million net loss in 2023.
“We are starting 2025 with strong momentum, backed by a positive commercial backdrop and high demand for aircraft parts and services,” Nick Finazzo, CEO at AerSale, said. “Combined with multiple expansion projects coming online in 2025, a robust environment for AerSafe and an improving lease pool, we are positioned to build on the momentum we set throughout 2024.”
Is AerSale stock a buy?
AerSale is a small company that doesn’t get a lot of analyst coverage, but the fact that it has consistently generated solid revenue and is profitable are good signs. It also finds itself in a market where it services and products are in higher demand.
Its price-to-book and price-to-sales numbers are fairly low, indicating that it’s a decent value. Its P/E is high, but it hasn’t had consistent earnings, so that’s hard to gauge. But its forward P/E is a reasonable 29.
It is a small, growing company, and those tend to be volatile. But if you are looking to fill a small position in your portfolio with a stock that has some potential upside, this is not a bad option in a space where there aren’t mane good ones right now.