A recent analyst note from Bank of America outlines a mixed outlook for the U.S. airline industry in 2025, emphasizing strong performance from network carriers and challenges for leisure-focused airlines.
What To Know: Lead analyst Andrew Didora says Delta Air Lines Inc (DAL ) leads the pack with robust revenue growth, fueled by corporate travel, premium offerings and Atlantic route expansion. Its Buy rating is reaffirmed with an unchanged price target of $78.
United Airlines Holdings Inc (UAL ) also holds a Buy rating, supported by similar trends, with a price target of $120.
American Airlines Group Inc (AAL ) has been upgraded to Neutral and its price target has been raised from $12 to $20. BofA says the airline stands to benefit from Delta-driven industry trends, including premium revenue growth and recovery in corporate travel. BofA also notes the potential to recapture $1.5 billion in market share lost in 2024, though execution risks temper expectations.
Conversely, Southwest Airlines Co (LUV ) and JetBlue Airways Corporation (JBLU ) face downgrades to Underperform. Southwest's price target is lowered from $33 to $31, reflecting challenges in adapting to post-COVID-19 pandemic industry dynamics, including competition from premium and corporate-focused carriers.
JetBlue's price target remains at $6.50 despite limited capacity growth and higher costs, compounded by a tough comparison to 2024's early Easter holiday.
Alaska Air Group Inc (ALK ), rated Buy, sees its price target raised to $80 from $70 by BofA, bolstered by opportunities from its Hawaiian Airlines acquisition.
Allegiant Travel Company (ALGT ) also benefits from a price target increase, climbing from $54 to $95, although concerns about pilot contracts and rising fuel costs persist.
Frontier Group Holdings Inc (ULCC ), rated Neutral, has its price target adjusted upward from $7.50 to $9 due to slightly higher earnings forecasts.
What Else: While rising jet fuel prices, up 8% year-to-date, weigh on the sector, network carriers like Delta, United and American remain better positioned. BofA expects these airlines to outperform in 2025, leveraging premium revenues and international routes to navigate cost pressures.
