TD Cowen Names United, American as Top Airline Stocks Amid Resilient Demand

A new analysis from investment firm TD Cowen highlights leading airline stocks that are well-positioned to perform as the sector navigates elevated fuel costs and higher ticket prices. The firm notes that air travel demand remains robust across both premium and economy cabins, with continued strength in corporate and leisure travel.

Sector Navigates Headwinds

According to TD Cowen, the airline industry is demonstrating resilient demand, allowing carriers with superior products and services to exhibit improved pricing power. This trend suggests a potential structural shift in the industry's competitive landscape, benefiting airlines that have made significant strategic investments.

Despite macroeconomic pressures, consumers continue to prioritize travel. The firm's analysis focuses on carriers that maintain strong operational performance and can effectively manage or pass on the impact of volatile fuel prices.

United Airlines: The Top Pick

TD Cowen designated United Airlines (NASDAQ:UAL) as its top pick, pointing to the carrier's decade-long transformational investments. United's management characterized fourth-quarter bookings as "tremendously strong," with approximately 35% of tickets for the period already sold, according to the note.

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The firm highlighted United's ability to manage fuel costs, noting management's belief that it can pass through 100% of fuel price increases with a two- to three-month lag. TD Cowen sees United as well-positioned regardless of fuel price movements; stable prices could expand margins, while elevated prices could strengthen its competitive position as weaker carriers struggle.

American Airlines: Performance on Track

TD Cowen also expressed an encouraging outlook for American Airlines (NASDAQ:AAL), stating that the carrier's controllable third-quarter 2026 performance is tracking in line with guidance. Key metrics such as revenue, capacity, and unit costs are meeting management's expectations.

The firm noted that approximately 25% of American's fourth-quarter inventory has been sold. While TD Cowen views American as having an attractive revenue mix, it cautioned that elevated spot fuel prices could risk delaying the airline's balance sheet repair. The carrier expects capacity growth in 2027 to be below this year's rate and recently announced seven new international routes for its network.