Investing.com -- Deutsche Bank downgraded shares of Frontier Group Holdings Inc (NASDAQ:ULCC) and JetBlue Airways Corp (NASDAQ:JBLU) to "Hold" from "Buy" amid signs of weakening demand in domestic discretionary air travel.
“We entered 2025 with high hopes that the supply/demand backdrop would drive solid profit growth, building on 2024’s results which were strong for the industry’s profit leaders,” analyst said adding that an "emerging economic soft patch" could weigh on consumer spending for flights, particularly in the low-fare segment.
While it remains positive on industry supply dynamics, Deutsche Bank adjusted its outlook for domestic unit revenue and lowered its price targets on Frontier to $8 from $12 and on JetBlue to $7 from $9.
Full-service carriers such as American, Delta, and United are seen as better positioned to weather the slowdown due to their diversified customer base and lower price sensitivity, the note said.
“Conversely, we have not observed any signs of weakness in corporate or long-haul international travel”
Deutsche Bank maintained its "Buy" ratings on SkyWest (NASDAQ:SKYW) and Sun Country, citing their more resilient revenue streams.
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