Benefiting from the booming tourism industry, US aviation stocks have successfully outperformed the large cap index, achieving their best performance in nearly a decade.

So far this year, the S&P Super Composite Airlines Index has risen by 60%, far exceeding the S&P 500 Index's increase of 27%, marking the first time since 2014 that the aviation industry index has significantly outperformed the large cap index.

On December 27, Bloomberg reported that the strong rebound in travel demand is one of the driving forces behind the soaring aviation stocks. Data from the US Department of Transportation also shows an unprecedented increase in the number of flights taken by Americans.

Among them, $United Airlines (UAL.US)$ Performing outstandingly, this year the stock price surged by 147.72%, becoming the fourth largest component stock in terms of increase in the S&P 500 Index.$Delta Air Lines (DAL.US)$、 $American Airlines (AAL.US)$ and $Southwest Airlines (LUV.US)$ Traditional Airlines are also favored by investors due to their premium travel services and international business.

Barclays Analyst Brandon Oglenski expresses a Bullish outlook on traditional Airlines such as United Airlines and Delta Air Lines as well as $Alaska Air (ALK.US)$the improved frequent flyer programs of Group and Frontier Airlines Holding Company.

In terms of Earnings Reports, $JetBlue Airways (JBLU.US)$ Southwest Airlines and American Airlines Group, among several other Airlines, have raised their earnings forecasts for the fourth quarter of 2024.

Looking ahead to 2025, industry insiders generally hold a Bullish attitude. Oglenski stated:

"We expect the fundamentals of the Aviation industry to improve significantly in 2025, with many Airlines' profit margins and earnings outlooks becoming stronger."

Meanwhile, the potential deregulation and tax cut policies that may be implemented following Trump's election as president are also seen as Bullish factors for the Aviation industry. An investment manager stated, "Overall, I am more confident; many management teams we have spoken with seem to be more optimistic about business and economic activity improving."

However, the rising trend of Aviation/airlines Industry stocks also faces some challenges. Due to $Boeing (BA.US)$The delay in aircraft deliveries and the fluctuations in oil prices have forced Airlines to continue using older airplanes, resulting in increased flying costs, which has kept many investors on the sidelines. Therefore, despite a recent rebound, the Aviation Industry Index is still more than 10% lower than its level at the beginning of 2020.

Additionally, it is worth noting that the world's largest international travel-related ETF $U.S. Global Jets ETF (JETS.US)$ Although it has surged 36% this year, its short positions have also increased significantly. Analysts believe this indicates that some fund managers are skeptical about the sustainability of its upward momentum. Morgan Stanley Analyst Ravi Shanker also stated, "Institution investors' Hold Positions in aviation stocks remain low."

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Editor/Rocky