Investing.com -- Bank of America analysts adjusted their outlook on several airline stocks, highlighting a divergence in performance between network carriers and domestic airlines.
The analysts upgraded American Airlines (NASDAQ:AAL) to Neutral from Underperform, citing benefits from strong premium revenues, a rebound in corporate travel, and growth in Atlantic routes.
"AAL should benefit from the strong trends discussed by DAL last week," they noted, referencing Delta Air Lines' (NYSE:DAL) recent positive earnings report.
In contrast, BofA downgraded Southwest Airlines (NYSE:LUV) and JetBlue Airways (NASDAQ:JBLU) to Underperform from Neutral.
The bank explained that these airlines have "less exposure to corporate, premium, and international routes" and face execution risks as they expand product offerings and refine networks.
BofA lowered LUV’s price objective to $31 from $33 and maintained JBLU’s at $6.50.
United Airlines was named as a top pick, with BofA indicating that it is well-positioned to capitalize on favorable trends in premium and corporate travel, as well as Atlantic route growth. The note suggested that these factors could help UAL outperform in the coming quarters.
The analysts also expressed concerns about the impact of rising jet fuel prices, which have increased by 8% year-to-date, pressuring near-term earnings for airlines like Alaska Air (NYSE:ALK) Group, JBLU, and LUV.
“Our EPS estimates are below 1Q25 consensus for on ALK (Alaska Air Group), JBLU, LUV, and ULCC (Frontier Airlines) given recent fuel moves while LUV and JBLU have 100-150bps of tougher revenue comparisons given the Easter shift," stated BofA.