Bank of America lifted its outlook for the airline sector on Tuesday on what the firm sees as a more constructive backdrop due to Spirit’s (NYSE:FLYY) (OTC:SAVEQ) reduction in capacity and improving trends in the demand picture over the last several months.
“We believe that a reduction in Spirit’s capacity could shift market share to other players and benefit certain carriers whose routes are most exposed to FLYY,” highlighted analyst Andrew Didora. He noted that in terms of market share on FLYY’s routes, the network carriers overwhelm FLYY’s capacity.
“In 2025, AAL and DAL hold 23% and 20% market share, respectively, while UAL has 16% and LUV 14%. However, when looking at route overlap, low-cost carriers also benefit. In 1H25,route overlap was as follows: ULCC 29%, JBLU 17%, and LUV 13%,” he tabulated.
As a result of the improved outook, BofA raised its price across the board: American Airlines Group (AAL) (new price objective of $14 from $13, Neutral rating), Allegiant Travel (ALGT) (PO to $50 from $45, Underperform rating), Alaska Air Group (ALK) (PO to $72 from $62, Buy rating), Delta Airlines (NYSE:DAL) (PO to $70 from $67, Buy rating), JetBlue Airways (JBLU) (PO to $4.00 from $3.50, Underperform rating), Southwest Airlines (LUV) (PO to $28 from $26, Underperform rating), United Airlines (UAL) (PO to $120 from $108, Buy rating), and Frontier Airlines (NASDAQ:ULCC) (PO to $6 from $4, Neutral rating).
The U.S. airline stocks with the highest Seeking Alpha Quant Ratings are SkyWest (SKYW), United Airlines (UAL), and American Airlines Group (AAL).