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Are you looking for airline stocks to buy and hold for the long haul?

The current conditions for investing in airline stocks aren't the best despite solid travel demand. Labor shortages, rising costs, and even slower delivery of new planes have created a challenging business environment. 

As we move into the fall, some of the issues airlines currently face could subside, allowing them to get their businesses ship-shape operationally. However, it's also possible that travelers will be less enthusiastic about paying higher airfares, and demand will wane.

Airline stocks, or any stocks for that matter, are better off being held for the long term where you let time take care of your profits in the markets. 

Which airline stocks should you buy and hold for the long haul?

I predominantly focused on companies that have good balance sheets and are reasonably profitable — we know from Covid-19 that it's not always possible for airlines to make money — and have a dominant position in the markets they serve. 

Here are my top three bets for the next three to five years.

Delta Air Lines (DAL)

Delta Air Lines (NYSE:DAL) and Southwest Airlines (NYSE:LUV) duke it out for the title of America's largest airline. I've liked some of the measures that Delta took at the height of the pandemic to keep passengers safe. In July 2020, I suggested that Delta shareholders would benefit from CEO Ed Bastian's strong leadership.

DAL stock is up more than 26% over the past 24 months. However, it's come down considerably since its April highs in the mid-$40s.

Delta reported second quarter 2022 earnings in mid-July. They weren't up to analyst expectations. However, it still managed to make $735 million in the quarter, the highest profit since the pandemic began in early 2020. 

For comparison, it made $1.53 billion in Q2 2019 on an adjusted basis, considerably higher than $921 million in the latest quarter. So, it's got a ways to go to get back to pre-pandemic numbers.

However, if you remove the 22% increase and fuel costs as well as the associated expenses of scheduling too many flights during the second quarter, which led to cancellations, Delta's revenues and profits appear to be almost all the way back to pre-pandemic numbers. 

Trading at about six times the analyst estimate of $5.52 a share in 2023, it's easy to see why 17 out of 20 analysts rate it "buy" or "overweight" with an average price target of $49.41. 

Good times are in the cards for Delta.

Copa Holdings (CPA)

Copa Holdings (NYSE:CPA) is almost back to where it traded in November 2018. At the time, I selected it as a stock to buy that did poorly in 2018. It bounced back, rising to $110 in February 2020. And then Covid-19 hit.

"Copa's been one of my favorite stocks trading on the NYSE for many years. Unfortunately, it is based in Latin America, which makes it more susceptible to currency, economic and political risks, not faced by airlines here in the U.S.," I wrote on Nov. 9, 2018.

"Under $100, you're getting growth at a reasonable price. Under $70, you're getting absolute value."

I would say, based on the average analyst estimate of $97.36, that analysts believe investors today are getting a good deal on Copa's shares. 

Copa reported Q2 earnings that beat both the top and bottom line. The Panama-based airline earned 32 cents, five cents better than the consensus estimate, and up considerably from a 38-cent loss a year ago. 

Like most airlines, Copa's revenues appear to be back to 2019 standards — it reported Q2 2022 revenues of $693.4 million, 7.5% higher than Q2 2019 — but its 23-cent earnings were about one-quarter of Q2 2019's. 

I like its chances over the long haul once travel returns to more normalized labor conditions and cost structures.

Allegiant Travel Company (ALGT)

Of the three stocks on my list, Allegiant Travel Company (NASDAQ:ALGT) has gotten pummeled the most in 2022, down more than 42%. 

The owner of the discount airline Allegiant Air reported Q2 2022 results on Aug. 3. Sounding like a broken record, Allegiant reported second-quarter revenue of $629.8 million, 28% higher than Q2 2019. It was the highest quarterly revenue in Allegiant's history.

Unfortunately, its operating income of $26.1 million was 75.8% lower than Q2 2019.

"Looking ahead to 2023, we remain focused on improving margins and our major strategic initiatives, including integration of the Boeing MAX fleet, and the opening of Sunseeker Resort Charlotte Harbor," stated Allegiant Travel Company CEO John Redmond. "These are major undertakings for the company, but I believe these ventures will create significant shareholder value in the coming years."

The company is spending $585 million on the Florida resort that will have 785 rooms, an 18-hole golf course, 19 restaurants and bars, and many other amenities. The resort is meant to attract the millions of passengers that Allegiant flies into Southwest Florida each ready. It will be ready before next summer.

Long-term, I like the company's vision. 

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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