A combination of slowing economic activity and concerns over a US-China trade war have led analysts Cowen to predict weaker growth from Atlas.
“We are downgrading Atlas Air shares to Market Perform from Outperform. We believe we passed the peak in spot pricing due to airlines restarting operations and are concerned about slowing economic activity and a restart of trade tensions between the US & China ahead of the US election in November,” said Cowen.
The analysts said that they saw downside risk to charter pricing as passenger airlines begin restarting operations, bringing belly capacity slowly back into the market bringing charter pricing down. In this scenario Cowen said slowing economic growth and US / China trade tensions could impact Atlas.
Despite this change of expectation on the cargo carrier Cowen said that it expected spot pricing to remain above historical norms in the near-term and the potential for Atlas to broaden its business with Amazon, but overall the analysts said that Atlas was facing lower than current demand in the future.
“With the world making progress on reopening from stay-at-home and airlines restarting operations, we expect to hear more about passenger belly capacity coming into the market. International restart will be slow, but capacity will steadily return to the market. As a result, we believe we've seen the peak for spot pricing and expect the next move to be lower as capacity returns.”