As i'm following airlines stock for a while theres seems to be an uptrend in the stock movement with some bullish catalysts looming, therefore i will present some bullet potential move for airlines, mainly legacy carriers;
- Business travel is back, there seems to be a trend that will normalize business travel back to pre covid era, and this was mentioned by United airlines CEO, Delta Ceo, and also Frontier .
- Business seats and Preimum seats are in demand, as more Americans prefer to pay 500$ ~ 1000$ more for a premium seat in an international flight or less in domestic. in general there are more rich people like all the diamond hands that bought palantir for 10$.
- 2026 Year of the world cup, maybe some of you dont know but the world cup is a huge deal all over the world, and this will bring huge huge amount of traffic during Q2 and Q4, flights will be fully booked with priced jacked up like crazy, there will be tons of Rich Europens and Rich arabs flying all over. This effect will produce a very high guidance.
- Consolidationin of the airlines market – Just in friday spirit airlines announced another chapter 11 bankruptcy, they even sent this message of bankruptcy to all of theyre customers, while they didn't ceased operations no customer will take a chance flying with them anytime soon, and the odds of spirit survivng this second chapter 11 is low. So there will be one less airline meaning more demand and higher prices, if you remmber there was also a merger between Alaska airlines and Hawian that took place last year. so the trend is clear less airlines and more mergers/bankruptcy.
- DAL p/e is 9 and UAL is 10 both airlines carry decent amount of debt, some are correlated to the leasing of jets and some is pure debt so take it as a risk. The margins of both airlines is in the 5% but there is a chance this can double or atleast get to 7%.
I do hold UAL and DAL but just share no options, not financial advice just a thesis.
Posted by Routine-District-588