Core Insights - Southwest Airlines has emerged as the leading US airline stock in 2025 despite experiencing a significant earnings decline [1] Financial Performance - In the first nine months of 2025, Southwest Airlines reported a profit decrease of 42% [1]

Group 1: Airline Industry Overview - Airline stocks have shown resilience, particularly after the end of the longest government shutdown in U.S. history, which had caused significant disruptions in flight operations [1] - The Zacks Transportation-Airline Industry is currently in the bottom 25% of over 240 Zacks industries, indicating a challenging environment for many airlines [2] Group 2: Notable Performers - LATAM Airlines Group (LTM) has gained +65% year-to-date, while International Consolidated Airlines Group (ICAGY) is up nearly +40% in 2025, both outperforming the Zacks-Transportation Airline Market's YTD return of +6% [3] - LTM holds a Zacks Rank 2 (Buy), and ICAGY has a Zacks Rank 3 (Hold) [3] Group 3: Domestic Airline Stocks - SkyWest (SKYW) is highlighted as a buy-rated stock, with FY25 EPS estimates increasing from $9.95 to $10.33, a 4% rise, and FY26 EPS revisions up 7% from $10.33 to $11.08 [4][6] - United Airlines (UAL) and Delta Air Lines (DAL) are also noted for their appealing EPS growth prospects, both holding a Zacks Rank 3 (Hold) [6] Group 4: Revenue and Valuation - Major airlines like United and Delta may face revenue challenges due to flight disruptions, but they lead in international capacity and profitability margins [7] - UAL and DAL are attractively valued, trading around the industry average of 10X forward earnings and less than 1X forward sales [7] Group 5: Stocks to Avoid - There are six stocks in the Transportation-Airline Industry with a Zacks Rank 4 (Sell) and two with a Zacks Rank 5 (Strong Sell), including Alaska Air Group (ALK) and Sun Country Airlines (SNCY) [9]