US network carriers are expected to continue to outperform in the first quarter of 2025 due to premium revenues, rebound in corporate travel, and growth in Atlantic routes, Bank of America analysts said in a report on January 17, 2025.
The analysts said Delta's strong first quarter 2025 revenue outlook also “bodes well” for airlines such as United Airlines and American Airlines.
Analysts Andrew Didora and Samuel Clough upgraded American Airlines to neutral with them expecting the airline to benefit from these strong trends.
“American Airlines could realise outsized benefit from the return of corporate travel given its $1.5bn market share loss in first half 2024,” the analysts said. “As such, we no longer believe an underperform rating is warranted and upgrade to neutral, which balances the revenue potential with execution risk."
However, JetBlue and Southwest were downgraded to underperform from neutral as a result of “less exposure to corporate, premium, and international routes”.
The analysts added: “Both airlines trade at the high end of historical valuation ranges despite less exposure to the strongest industry trends and are exposed to execution risk as Southwest expands its product offering (assigned/premium seats) and JetBlue continues to fine tune its network.”
In addition, fuel price increases are expected to put pressure on airlines' near term earnings, particularly on Alaska Airlines.
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