Alaska Air Group (ALK), JetBlue Airways (JBLU), Southwest Airlines (LUV), and Frontier Airlines (ULCC) are expected to report Q1 earnings per share below Wall Street's expectations due to higher fuel costs, BofA said in a note Friday.

"For 1Q25 outlooks, we are below Street EPS for ALK, JBLU, LUV, and ULCC as strong revenues are partly offset by higher fuel," BofA said. It also downgraded LUV and JBLU to underperform from neutral, pointing to "less exposure to premium, corporate, and int'l while trading at premiums".

In general, the report said that network carriers should continue to outperform due to their premium revenues, the rebound in corporate travel, and growth in Atlantic routes.

"We saw that as DAL (Delta Air Lines) set the table last week..., and we think this also bodes well for UAL (United Airlines)," the report said.

BofA said American Airlines (AAL) should also benefit from the trends.

"AAL could realize outsized benefit from the return of corporate travel given its $1.5B market share loss in 1H24," the report said.

"As such, we no longer believe an Underperform rating is warranted and upgrade to Neutral, which balances the revenue potential with execution risk."

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