With the S&P 500 down more than 3% year to date (as of this writing), many investors aren’t feeling so motivated to add positions to their holdings right now. This lack of interest, however, can be shortsighted. Times like these are when savvy investors who recognize the potential of quality companies are loading up on their stocks, positioning themselves for long-term gains.

Joby Aviation (JOBY 1.88%) and Southwest Airlines (LUV 0.29%) are two such aerospace names that have popped up on investors’ radars. To help them decide whether it’s a smart move to land these aerospace stocks in their portfolios, two Fool.com contributors examine the bull arguments.

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Joby Aviation can put a charge in your portfolio

Scott Levine (Joby Aviation): It’s not often that the opportunity to invest in a nascent industry arises, but this is exactly the case with Joby Aviation. Reimagining how people travel in urban areas, Joby is developing innovative electric vertical takeoff and landing (eVTOL) aircraft that the company will use to provide air taxi service.

Bringing a new type of aircraft to market is a heavy lift, but the company continues to make steady progress toward achieving the requisite Federal Aviation Administration (FAA) certifications. And last month, the company conducted its first piloted flight that included a transition from vertical takeoff to cruise flight and back to vertical.

Lauding its accomplishment, Joby characterized itself as “the first company to routinely perform inhabited testing of an electric air taxi from hover to wingborne flight.”

While it works toward FAA certification, Joby is making progress in other areas as well. For one, the company is expanding its factory in California to provide pilot training and better aircraft maintenance, which will serve it well when commercial operations begin.

And it is inking agreements with partners. Last quarter, management announced a partnership with Virgin Atlantic to provide air taxi service at the company’s British hubs at London Heathrow and Manchester airports.

Sure, there’s a fair degree of risk with Joby since it’s in the pre-revenue phase of its development, but investors who are not risk-averse have a great opportunity now with the stock down about 18% since the start of the year.

Southwest has a clearer path to success

Lou Whiteman (Southwest Airlines): First, full disclosure: I currently own shares of Joby, and not Southwest. But those Joby shares were bought at a lower price than where they trade today. I’m optimistic about the long-term potential for eVTOLs, but for most investors, Southwest is the better buy today.

Southwest has a long history of innovation in the airline industry, but it has fallen on hard times. A failure to invest in tech upgrades has caused reliability issues, and management’s refusal to match competitors on fees and other revenue enhancements have eaten into profitability.

The stock is down 50% from its post-pandemic high. But Southwest, with the help of activist investors’ pressure, is in the process of restructuring.

Over the next 18 months, the airline will revamp its schedule, pricing strategy, and loyalty program, which should boost profitability by $4 billion annually by 2027. It also expects the MAX 7 version of Boeing‘s 737 to be certified this year, which would add a plane custom-designed for Southwest’s route map and help boost efficiency.

As the changes take hold, look for markets to rediscover what attracted investors to the airline for decades. The company has an industry-best balance sheet and significant scale and pricing power, accounting for about 17% of the U.S. market.

While Joby and eVTOLs have great potential, there is also much greater risk. The company is racing a half-dozen competitors to bring a product to market. There is definite interest, but the extent of that interest in terms of the eventual size of the total market is unclear. Questions including pricing power and how fast these businesses will be able to ramp up remain unanswered.

With an enterprise value of more than $4 billion, investors are being asked to pay a steep price to buy into a company with no history of producing revenue, let alone profits. Southwest, by comparison, has a $15 billion enterprise value.

And if eVTOLs are the future, Southwest will not be left out. The airline has a deal with Joby rival Archer Aviation (NYSE: ACHR) to develop a taxi service connecting California airports.

For all the excitement around eVTOLs, Southwest offers a much clearer path for market-beating returns from here.

Should you take flight with one of these stocks now?

Since investors’ goals vary, it’s hard to categorically say that either Joby Aviation or Southwest Airlines is a better proposition right now. Growth investors who are comfortable with a high-risk, high-reward opportunity should certainly consider Joby, with the stock providing a less expensive entry point now compared to the start of the year.

More-conservative investors, on the other hand, would be better served to fly with Southwest Airlines stock considering the company’s rock-solid balance sheet and commitment to restructuring.

Shares in United Airlines (UAL -11.54%) were down as much as 11.4% today due to market volatility and investors digesting Delta Air Lines‘ (DAL -11.14%) earnings report and commentary the day before.

A challenging environment

United Airlines will report its first-quarter 2025 earnings on April 16, and if Delta’s earnings are any indication, United’s management is highly likely to report deteriorating conditions.

Both airlines had already alerted the market to the uncertainty created by tariffs negatively impacting bookings. For example, in early March, Delta Air Lines management told investors that its first-quarter revenue growth would come in closer to 4% compared to previous guidance for growth of 7% to 9%. Ultimately, Delta’s revenue growth came in at 3.3%.

Delta’s CEO Ed Bastian said “uncertainty around global trade” meant that growth had “stalled” with consumers and corporate travel negatively impacted. On a brighter note, he claimed that its international, premium, and loyalty-based revenue displayed “greater resilience.”

Delta declined to update its full-year guidance due to the uncertain market conditions.

What it means for United Airlines investors

Delta’s commentary on international and premium travel holding up provides some comfort, but the weakness in Delta’s main cabin revenue is highly likely also reflected in United’s outlook.

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However, long-term investors were given more comfort as Delta’s management said it would reduce capacity growth in the second half of the year in response to market conditions. That’s a positive sign as it indicates an industry acting in a disciplined manner when a slowdown occurs.

Investors’ primary near-term concern is stabilizing the trade conflict so the air travel industry can continue recovering from the lockdown periods.

Despite the recent decline in the share price of United Airlines (UAL 4.36%), the stock is still up 69% over the last year. However, there’s more room to run, and even the latest news of a slowdown in bookings shouldn’t shake long-term investors out of the stock.

Why United Airlines stock is volatile

First, it’s worth acknowledging that United Airlines, like most airline stocks, is volatile and often traded on momentum. This is due to the delicate relationship between its margins and demand/supply conditions.

Airlines tend to have relatively high fixed costs, so they have pricing power when booking demand exceeds capacity, and revenue expands, leading to margin expansion. Unfortunately, the reverse is true, and all it takes is a slight downturn in demand to lead to margin pressure.

The latter is why investors have sold off the stock recently, as United Airlines and premium peer Delta Air Lines have both spoken of a recent weakening in demand. This may relate to cautiousness among consumers and corporations about the economy following the imposition of tariffs by Donald Trump, compounded by a drop in government bookings.

Why it’s not too late to buy United Airlines stock

But sentiment can change as quickly as it fell away, as consumers and businesses adjust to the tariffs or the tariffs get removed or reduced. As for government bookings, United is already adjusting by preparing to replace government bookings with leisure bookings.

Image source: Getty Images.

Also, investors were worried about overcapacity last summer, and the airline industry’s response was to reduce unnecessary capacity. United CEO Scott Kirby believes a similar outcome will occur this year if the current weakness is extended — not least as airlines face pressures from airport costs and supply chain difficulties that are pressuring the profit of the low-cost carriers.

While there’s potential for more near-term demand weakening, United Airlines is in a good position to be a winner when it ends, which could be sooner than many expect, and it’s not too late to invest.