Editors' Pick: Originally published Dec. 28.

The airline industry confounded investors in 2015 as share price performance was mixed even as profits reached record levels.

Looking to 2016, analysts appear generally optimistic that profits will continue to remain strong and that this time around, share prices should follow. Nonetheless, the airline industry, as always, faces barriers that include not only its own conduct, which could lead to excessive capacity growth and fare discounting, but also outside factors, including slower economic growth and the possibility that the steep decline in fuel costs will reverse.

"Although the U.S. airline industry is on track to achieve a record net profit of $18 billion for 2015, share price performance for some of the names has been lackluster at best," wrote Deutsche Bank analyst Mike Linenberg in a recent report which referred to the big four U.S. carriers.

"We think investors have been less willing to embrace fuel savings-driven earnings growth, particularly when it is overshadowed by increased discounting, over-supplied markets, and moderating global GDP growth," he added.

"The primary risk for 2016 as we see it is that the present set-up is similar to a year ago," Linenberg said. "While that could spell another year of mixed stock performance, it would, at the very least, allow the airlines to retire a greater number of shares via their capital deployment programs."

The Deutsche Bank analyst is forecasting industry pretax profits of $25 billion for 2016, and picks as his favorites American Airlines (AAL) , Delta (DAL - Get Report) , Southwest (LUV - Get Report) and United (UAL - Get Report) , as well as regional carrier Skywest (SKYW - Get Report) .

As of Friday's close, American shares stood at $43.81, down 18% year to date. United shares were priced at $59.78, down 10.6%. Southwest shares were at $43.90, up 3.7%. Delta shares were at $52.26, up 6.2%. Skywest was up 55%.

Among the majors, the big winner year to date was JetBlue (JBLU - Get Report) , up 47%, while Hawaiian was up 43%. The biggest loser was Spirit (SAVE - Get Report) , down 43%; American was the second-biggest loser.

Fitch Ratings said its credit outlook for U.S. airlines remains positive, thanks to "continued low fuel prices and growing global demand for travel."

"Fitch expects free cash flow to expand and debt balances to come down incrementally, leading to further improvement in airline credit profiles," the ratings agency said. "The outlook is tempered by a soft unit revenue environment, weakness in various international economies and potential for increased shareholder-friendly cash deployment. "

Fitch expects fuel prices to remain low. "Assuming crude prices remain stable, the four largest U.S. carriers could spend approximately $28 billion less on fuel between 2015 and 2016 than if fuel had stayed at 2014 levels," Fitch said.

A downside, Fitch said, is that "cheaper fuel is likely to drive some incremental capacity and cheaper fares."


Credit Suisse analyst Julie Yates wrote, "We commence 2016 broadly constructive towards the airline sector, with more than half of our ratings outperform. The U.S. remains our preferred geography overall."

Even though Credit Suisse expects a firmer average Brent crude oil price in 2016, "We anticipate airlines recording lower fuel bills as expensive hedges are extinguished," Yates wrote. "We expect more fuel gains to be retained by carriers this year, but these provide a ready lever to stimulate demand -- much as they did in in 2015."

Among U.S. carriers, Yates' favorite airlines are Delta and Southwest.

Cowen analyst Helane Becker says her top pick for 2016 is Spirit, the airline that has been in the middle of the current year's fare wars and has paid the biggest price for its involvement.

While it is clear that the falling price of oil has been the principal factor in the airline industry's recent success, it has not been the only factor. American Airlines CEO Doug Parker said during the carrier's third-quarter earnings call that Brent oil prices this year will average around $55 a barrel, just as they did in 2005.

"In 2005, this industry lost $28 billion," Parker said. "In 2015, we're going to make something close to $20 billion. This business is not the same. It's dramatically different. People that are worried that, 'Oh my gosh, now that fuel prices have fallen, here go fares falling and what are the airlines going to do? It's the old business again,' are missing the point and are missing what has happened."

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.