Here’s Why Airline Stocks are a Mixed Bag Now

Though the International Air Transport Association has reported a better outlook for the airline industry for 2011 with profits expected to go up 73% from $4 billion to $6.9 billion, airline stocks (NYSE:FAA) are a mixed bag. With the outlook for 2012 still looking difficult, investors are not exactly piling into airline stocks yet.

IATA’s report states profits next year “will be in the doldrums” — excluding airlines operating in the Asia Pacific region, which will likely see profits at 2011 levels. Economic slow-downs in other regions will negatively affect profits amidst gloomy business confidence.

“IATA expects passenger demand to rise 5.9 percent in 2011, revising its June prediction of 4.4 percent. Next year’s growth is seen at 4.6 percent. The group slashed its freight growth forecast to 1.4 percent from 5.5 percent with airlines expected to carry 46.4 million metric tons of cargo this year. Growth will accelerate to 4.2 percent in 2012, according to IATA,” according to Bloomberg.

Stocks to Watch: JetBlue (NASDAQ:JBLU), Alaska Air Group (NYSE:ALK), United Continental Holdings (NYSE:UAL), Southwest (NYSE:LUV), Delta (NYSE:DAL), AMR Corp. (NYSE:AMR), US Airways (NYSE:LCC), Hawaiian Holdings (NASDAQ:HA).