UBS has started covering U.S. airline stocks and predicts that revenue per available seat mile (RASM) will grow significantly by 2025, leading to improved profit margins.
Alaska Air Group, United Airlines, and Delta Air Lines have been given a "buy" rating by the bank, as it expects these carriers to experience strong profit growth. These airlines are expected to navigate potential challenges from fluctuating travel demand and cost inflation due to their strong pre-tax profit margins and solid balance sheets.
On the other hand, American Airlines, Loyalty Ventures, and Frontier Group have been given a "neutral" rating by UBS. Southwest Airlines and JetBlue Airways have been given a "sell" rating due to concerns about their profit margins, valuation, new service and revenue strategies, ability to achieve positive operating margins, ongoing cash burn issues, and heavily leveraged balance sheets.