- Raymond James analyst Savanthi Syth updated ratings and price targets for a few U.S. airlines and revised the estimates.
- The analyst states that the revised U.S. airline estimates reflect a stronger near-term revenue trend, stubbornly higher fuel prices, anticipated demand softening, and planned and expected capacity growth moderation.
- Syth says that despite multiple media reports about customers reconsidering travel due to high costs, U.S. airlines still report strong demand and yields even after the summer, albeit in the context of normal seasonality and a tiny sample beyond the summer. She believes part of this resiliency is due to supply lagging demand by a meaningful margin.
- While demand remains strong, the analyst notes that some weakness appears inevitable as consumer savings rates normalize from above-normal levels and as a result of the Fed tightening rates, the impact of negative headlines on sentiment, and/or market forces required to address supply chain issues.
- Related: Delta, United Airlines Positive On Post-Pandemic Spending: Reuters
- According to the analyst, mainline capacity constraints are projected to persist until mid-2023, with regional airline constraints taking 6-12 months longer to address.
- Related: Pilot Shortage Pushes American Airlines To Quit Services In 4 Cities: CNBC
- Syth states that with considerable adjustments to schedules due to staffing issues, U.S. airline operations are improving, albeit the environment remains challenging.
- Alaska Air Group, Inc. ALK was downgraded to Outperform from Strong Buy due to potential earnings and operational volatility around exiting the A320 fleet by early 2023.
- The analyst lowered the price target to $58 (an upside of 48%) from $75.
- Syth remains constructive on ALK, citing its reasonably intact balance sheet and capital structure, but she anticipates that its fleet transition (mainly in 4Q22-1Q23) would create increased cost risk in an already difficult (industry-wide) operating environment.
- Price Action: ALK shares are trading lower by 3.37% at $39.01 on the last check Thursday.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.
All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.
Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.
Rate collection and criteria: Click here for more information on rate collection and criteria.