The brokerage reportedly noted that the setup is positive for the airlines with an “elongated mid-cycle” beginning in 2026.
- American Airlines, United Airlines, Alaska Airlines, and Delta Air Lines received a ‘buy’ rating.
- Southwest received a ‘neutral’ rating, while JetBlue was rated ‘sell.’
- Over the past few years, the dip in demand for economy fares, combined with rising costs, has severely eroded margins at low-cost carriers.
Citi analysts threw their weight behind major airlines to reap the benefits of a positive demand cycle in 2026, but also had a warning for low-cost carriers.
As per TheFly, the brokerage initiated coverage of several airlines, with Alaska Air, American Airlines, United Airlines, and Delta Air Lines receiving a ‘buy’ rating, while JetBlue was rated ‘sell’, and Southwest received a ‘neutral’ rating.
What Did Citi Analysts Say?
The brokerage reportedly noted that the setup is positive for the airlines with an “elongated mid-cycle” beginning in 2026. The research firm sees the largest beneficiaries as being the “supermajors.” United, Delta, Southwest, and American Airlines are considered the ‘big four’ in the U.S. aviation industry.
The large airlines offer the most favorable risk/reward, the analyst said to investors in a research note. The brokerage also noted that the legacy low-cost carriers will underperform throughout the cycle.
Over the past few years, the dip in demand for economy fares, combined with rising costs, has severely eroded margins at low-cost carriers. Earlier this September, Spirit Airlines, which filed for bankruptcy for the second time in less than a year, revealed plans for further job cuts and a reduction in flight schedule in November to cut costs.
What Are Stocktwits Users Thinking?
Retail sentiment on Stocktwits about United Airlines was in the ‘bullish’ territory, and about Delta was in the ‘bearish’ territory at the time of writing.
All major airlines are expected to take a hit in the fourth quarter due to a federal government shutdown. They grappled with flight cancellations nationwide during the six weeks of the longest shutdown in U.S. history. The Trump administration ordered temporary flight reductions at 40 major airports during the U.S. government shutdown, citing shortages of air traffic controllers and security staff. The move pushed airlines to cut schedules and rebook travelers, leading to widespread disruptions across the system.
United Airlines stock has gained 11.5% this year, and Delta stock has gained nearly 12%. While American Airlines, Alaska Air, and JetBlue have fallen between 16.3% and 40%.
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