2 airline stocks worth buying in 2017

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Ryanair plane in flight

It was a tale of two halves for low-cost airline Ryanair(LSE: RYA) in 2016. After reaching all-time highs of EUR15.59 at the start of the year, the company's share price began its six-month slide to EUR13.70 by the time the nation took to the polls in the EU referendum. After seeing the value of their shares quadruple from EUR3.86 to EUR15.59 in just five years, shareholders will have viewed a 12% share price correction as insignificant in the context of their huge long-term gains.

Brexit panic

However, the surprise decision to leave the European Union turned the gentle share price slide into a full-blown collapse with the Dublin-based carrier shedding a staggering 24% of its value in just two days following the shock Brexit vote. But while weaker investors panicked in the wake of the surprise result, others took the opportunity to buy into Ryanair's longer-term appeal at bargain basement prices, at one point 33% lower than at the start of the year.

The subsequent rally has sent the shares back to where they started in 2016, with those who followed the herd in June learning a tough lesson along the way, in stark contrast to the brave contrarians who picked up shares during the post-referendum carnage and are now sitting on impressive gains in excess of 40%. So is it too late to invest in Ryanair, or is there still hope for further gains?

Traffic surges

Well, the company's latest traffic statistics were certainly encouraging, with a surge in the number of customers for December, which reached 9m. That's an impressive 20% improvement from December 2015, with the load factor, which gauges how full the planes are, flying three percentage points higher at 94%, and rolling annual traffic to December up by 15% at 117m. Management cited the continuing success of the company's Always Getting Better customer experience programme as the main driving force behind the improvement.

Ryanair's share price is rapidly closing in on last year's all-time highs, but I still see good value for growth investors with the P/E ratio falling to 12 after anticipated earnings growth of 39% over the next three years.

Gee Wizz

Ryanair wasn't the only budget airline showing off its latest traffic statistics earlier this month. Central and Eastern Europe's largest low-cost airline Wizz Air(LSE: WIZZ) reported 23% growth in passenger numbers for December to 1.88m, with the load factor rising to 87.3% and passenger numbers improving 18.8% to 22.78m on a rolling 12-month basis.

The FTSE 250-listed airline also announced 19 new routes and as it continues to expand its network and strengthen its customer offering and operations. The shares trade on an undemanding earnings multiple of 10 for the current year to March, dropping to just nine by fiscal 2019. Wizz Air seems to me a low-cost airline at a lost-cost price.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.