Investing.com -- UBS downgraded Alaska Air (NYSE:ALK), Delta Air Lines (NYSE:DAL), and United Airlines from Buy to Neutral warning that a likely U.S. recession could weigh on revenue and profits across the airline sector.
The brokerage said it expects reduced demand to pressure revenue per available seat mile (RASM) and earnings, despite airlines’ strong positioning in the medium term.
UBS cited its U.S. economics team’s revised GDP forecast, which now projects just 0.4% growth in 2025, down from 1.6%, including two quarters of negative growth, a technical recession.
“Recessions are bad for airlines,” UBS wrote, noting RASM fell 10% to 11% during the 2001 and 2009 downturns.
While lower fuel prices offer some cushion, the firm said they won’t fully offset weaker demand, especially in international and premium segments, which have been recent areas of strength.
The three large network airlines, American Airlines (NASDAQ:AAL), Delta Air Lines, United Airlines, have realized support from strength in international and premium while premium has supported Alaska.
UBS cut its 2025 and 2026 earnings estimates for the major network carriers by 20% to 40%, with even larger reductions for low-cost carriers like Allegiant and Frontier.
The brokerage also lowered its price targets and now rates all major U.S. airlines Neutral, except JetBlue, which remains a Sell.
The firm expects airlines to withdraw 2025 guidance during first-quarter earnings calls, citing limited visibility. Investors will closely watch commentary on bookings and trends in premium and international travel, UBS said.
“We continue to favor the position and strategies of these three companies in the medium term but we do not expect them to be immune to the significant cyclical pressure that typically occurs during an economic downturn,” analyst at UBS said.
Related articles
Spirit Airlines CEO steps down weeks after carrier exits bankruptcy
Mesa Air Group shares soar on merger deal with Republic Airways
Factbox-Companies eye US expansion to lessen fallout from tariffs
免责声明：投资有风险，本文并非投资建议，以上内容不应被视为任何金融产品的购买或出售要约、建议或邀请，作者或其他用户的任何相关讨论、评论或帖子也不应被视为此类内容。本文仅供一般参考，不考虑您的个人投资目标、财务状况或需求。TTM对信息的准确性和完整性不承担任何责任或保证，投资者应自行研究并在投资前寻求专业建议。