Top Airline Stocks to Watch, According to TD Cowen

TD Cowen has identified United Airlines and American Airlines as the top airline stocks to watch amidst an increasingly resilient sector. These two carriers are demonstrating strong operational performance and strategic investments that position them favorably in the current environment. United Airlines leads the list as the firm's top pick, thanks to its decade-long transformation and ability to pass on fuel cost increases to passengers.

The carrier is seeing tremendous booking strength, with approximately 35% of tickets already sold. United's management believes the company can fully pass on fuel cost increases, which could substantially expand margins if fuel prices remain high. American Airlines also stands out, with its controllable third-quarter 2026 performance tracking in line with expectations.

Revenue, capacity production, and unit costs are meeting management's projections, with fuel costs projected to be close to forecasts. The carrier has a more attractive revenue mix than Delta Airlines and boasts approximately 25% of fourth-quarter inventory sold. American plans to add seven new international routes in 2027 to expand its network, though elevated fuel prices could delay balance sheet repair. Capacity growth in 2027 is expected to be below the current rate.