RJ Hamster
Even the Best Airlines Don’t Look Great
Not rendering correctly? View this e-mail as a web page here.Even the Best Airlines Don’t Look GreatBy Joel Litman, chief investment officer, Altimetry Delta Air Lines (DAL) CEO Ed Bastian didn’t mince words…Speaking at a September event with Atlanta Federal Reserve President Raphael Bostic, he warned that most airlines won’t make money in 2025. And he didn’t blame fuel prices… union talks… or weather delays…Instead, he pointed to a deepening economic split between travelers.Budget carriers and economy-heavy airlines are getting squeezed as consumers cut back on spending.According to Bastian, only Delta and United Airlines (UAL) are positioned to survive… because they’ve built their business models around premium services such as first-class cabins and lucrative corporate accounts.For everyone else, he predicts tough times ahead.The airline industry is entering a dangerous new cycle. And as you’ll see, even the best-in-class options aren’t a great place for your money these days…At first glance, it seems like air travel is doing just fine…The Transportation Security Administration (“TSA”) reports that nearly 2.8 million people passed through U.S. airports on October 20. That’s almost 200,000 more than the same day in 2019.But those numbers don’t tell the whole story.What has changed is who is flying. Corporate accounts have made a comeback after COVID-19. High-income travelers are still spending on comfort and flexibility.All of this is great news for carriers with strong premium offerings. Delta and United have doubled down on this strategy. Both now generate more than half their passenger revenue from premium seats and loyalty programs, not basic economy fares.But companies that target budget-conscious flyers are in a bind. Lower-income consumers are getting more selective. Sometimes, they’re skipping flights altogether.Recommended Links:Here’s What You Missed Last NightThe White House’s “buy list” is moving markets. One stock jumped 90% overnight. Another surged 200% within 24 hours. Now, with more federal money on the way – and Wall Street getting in on this era-defining trade – the next round of targets could skyrocket even higher. Get the full story now before Washington moves again.Until Friday: Get Marc Chaikin’s Highest-Rated Stock PickMarc Chaikin just released what could be his biggest opportunity of 2025. One stock is flashing VERY BULLISH in his Power Gauge system – the highest possible rating. The “smart money” is piling in… it’s crushing the S&P 500 Index… and Marc believes it could double in the coming months. Your chance to get access to this stock recommendation at 70% off ends Friday at midnight. Click here before then to avoid missing out.Budget airlines can’t lean on corporate spending to make up the gap. Many are too small to charge a premium for comfort.So margins are getting compressed at the exact time when inflation is driving up costs.Unless you’re Delta or United, that’s a recipe for poor returns…We compared these two mainstay airlines with the rest of the industry… including budget offerings like Southwest Airlines (LUV), Frontier (ULCC), and Sun Country Airlines (SNCY).During the pandemic’s peak, average Uniform return on assets (“ROA”) fell for Delta and United… but not nearly as much as the rest of the industry.They also bounced back stronger. And they’re expected to stay more profitable from here… with roughly 6% returns through 2026 versus just a 4% average for other airlines.Check it out…This might seem like a small difference. But most airlines’ breakeven point is between 5% and 6%.Said another way, it’s actually the difference between making money… or not.To be clear, we’re not excited about any airline right now…Delta and United are doing better than the rest. But with 7% and 5% returns in 2024, respectively, both are still far below the 12% market average.It’s getting harder for even the best airlines to stay in the black without a completely full first class.And as for everyone else… cheap share prices might seem like a tempting offer. But the air-travel industry has taken hit after hit.We’d keep our money far away.Regards,Joel LitmanNovember 19, 2025Tell us what you think of this contentWe value our subscribers’ feedback. To help us improve your experience, we’d like to ask you a couple brief questions.Click here to rate this e-mailA publication from  You have received this e-mail as part of your subscription to Altimetry Daily Authority. If you no longer want to receive e-mails from Altimetry Daily Authority, click here.Published by Altimetry.You’re receiving this e-mail at peter.hovis@gmail.com. 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All employees of Altimetry (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation.This work is based on SEC filings, current events, interviews, corporate press releases, and what we’ve learned as financial journalists. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. |
