Airlines’ plans to increase their U.S. carrying capacity more slowly should offer a boost to
Southwest Airlines
and other regional airlines,
Deutsche Bank
said.
Analyst Michael Linenberg raised his rating on
Southwest
stock to Buy from Hold, increasing his target for the price to $42 from $28. He upgraded shares of
JetBlue Airways
and
Alaska Air Group
to Buy from Hold for the same reason.
Shares of Southwest were 2% higher at $34.65 in afternoon trading. JetBlue stock was up 0.2% while Alaska stock had gained 3.5%. The
S&P 500
was 0.9% lower.
Linenberg wrote that the outlook for domestic capacity in 2024 has “dramatically changed” over the past four months as Southwest and other airlines have announced plans to moderate capacity growth this year following a postpandemic travel surge.
That bodes well for domestic unit revenue growth, the analyst said.
“We believe more moderate domestic ASM (available seat mile) growth for 2024 will have positive implications for domestic unit revenue performance, and by extension, should translate into solid top-line performance for the domestic-focused names,” Linenberg said in the research note.
Write to Angela Palumbo at [email protected]
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