Gary Hershorn/Getty Images
Takeaways
- UBS analysts cut and downgraded their price targets on Monday for several airlines citing concerns about a possible recession.
- Delta, Alaska, and United were downgraded to "neutral" from "buy" ratings.
- Analysts said that they expect full-year predictions to be suspended in the wake of the current uncertainty when the airlines report their earnings in the next few weeks.
UBS analysts cut and downgraded their price targets on Monday for a number airlines, amid fears that tariffs imposed by the Trump administration will push the U.S. into a recession.
Analysts have downgraded Delta Air Lines and Alaska Air Group to “neutral”, from “buy”. Analysts wrote that the analysts believe that the worsening consumer sentiment, and the global impact from tariffs will “likely” cause a deterioration of both the international and premium segments. This is a major risk for the three airlines downgraded.
UBS now has “neutral” ratings on most of the U.S.-based carriers—including American Airlines (AAL), Southwest Airlines (LUV), Frontier Group Holdings (ULCC), and Allegiant Travel (ALGT)—with a “sell” rating on JetBlue Airways (JBLU). Analysts have cut their price targets on all eight airline stocks. The biggest cuts were at Delta (to $42 down from $77) and United ($59 down from $107).
UBS expects that some airlines may suspend their full-year forecasts amid uncertainty
Analysts said that they expect some airlines to suspend their full-year forecasts as a result of economic uncertainty. Several airlines lowered their expectations for first-quarter revenue, among other metrics.
"While the uncertainty is obviously large from a macro perspective, considering the weakening in domestic leisure and slowing in corporate travel growth already observed in Feb / March and the rising risk from the impact of large tariffs, we believe it makes sense to factor in a backdrop of worsened economic performance," the analysts wrote.
Spirit Airlines, another airline in the sector, announced that Ted Christie, its CEO, will be stepping down immediately as part of a reorganization of the executive team, just weeks after the airline emerged from bankruptcy restructuring.
