JP Morgan's airline valuation dash report for December was positive on the North American aviation front, with analyst Jamie Baker stating: “We can confidently declare a new ‘golden age’ for US airline as the industry has finally bifurcated with the big three on top.”
Baker added that the US big three — American, Delta, and United — have “doubled down” on their loyalty and premium products, while also pushing international offerings. These drives are expected to drive profitability for these carriers. However, low-cost carriers' performance remains constrained.
For Latin America, analyst Guilherme Mendes noted LATAM Airlines was noted for its stronger performance post-Chapter 11 restructuring and has “been able to keep unit revenues elevated with a leaner cost structure”. Mendes also noted GOL's undergoing Chapter 11 process, which “should imply a significant equity dilution” for the airline.
JP Morgan is also “turning more positive” on airlines in China and Hong Kong. Analyst Karen Li said this was driven by factors such as easing fuel costs, tightening supply leading to a more improved yield management, as well a surge in cross-border e-commerce prompted by President-elect Donald Trump's tariff measures. In addition, China's visa-free entry scheme is expected to boost business travel and tourism in the region.
Li added: “In the near term, we favour Cathay Pacific, which is currently on our positive catalyst watch. Despite being a laggard in the region's re-opening race, Cathay is actively catching up as a key transit hub, with a strong market presence, capturing approximately 40% of Hong Kong's air cargo market.” Cathay, Li continued, is “well-positioned” to gain from the region's air cargo front-loading ahead of the Trump tariffs.
Singapore Airlines' profitability is expected to ease, Li said, as a result of normalising passenger yields, growing costs, as well as the negative equity as a result of Air India's consolidation and merger with Vistara. However, Li said in a separate report that the merger will enhance SIA's global reach and operational synergies. This, in turn, will allow it to capitalise on India's aviation market, which is one of the fastest growing markets in the sector currently.
According to analyst Amyn Pirani, Indian airlines are expected to “remain in a sweet spot” for supply and demand over the next four to six quarters. Consolidation is also expected to maintain supply tightness within the market.
European airlines' price performance has turned more positive in the fourth quarter, according to analyst Harry Gowers. This was driven by easing concerns over demand in the region as well as falling fuel prices.
Australia's domestic demand had remained resilient, according to analyst Abhinav Suthakar. This comes despite growing cost of living pressures in the region for customers. Suthakar said this indicates that travel is still prioritised despite potential cutbacks in non-essential spending.