US Airline Stocks See Targets Trimmed By Analyst (UAL, AAL, LUV, DAL)

The airline sector is experiencing renewed turbulence as Bernstein analysts have recently lowered their price targets on several major U.S. carriers, signaling continued caution about the industry's near-term prospects.

The adjustments reflect mounting concerns over uncertain travel demand, rising fuel costs, and broader macroeconomic headwinds that are weighing on airline profitability.

Delta Air Lines (DAL), American Airlines (AAL), Southwest (LUV), and United Airlines (UAL) are among the carriers feeling the pressure. Bernstein's actions underscore a growing unease among analysts regarding the sector's ability to navigate the current economic climate. This follows a trend seen earlier in the year, where firms like UBS and Susquehanna also slashed price targets across the airline industry due to declining consumer sentiment and potential recessionary fears.

• Delta Air Lines – Cut From $61 to $60, Outperform
• American Airlines – Cut from $15 to $14, Outperform
• Southwest – Cut from $31 to $30, Market Perform
• United Airlines – Cut from $105 to $104, Outperform

The sector's recent performance has been a rollercoaster ride. Just this past Monday, June 17th, airline stocks enjoyed a significant bounce, with DAL surging 5.14%, UAL climbing 6.11%, and AAL rising 5.11%. Southwest Airlines (LUV) also saw a modest gain of 1.48%.

However, the optimism proved short-lived. The following day, Tuesday, June 18th, airline shares faced a sharp reversal, with DAL dropping 4.3%, UAL plummeting 6.2%, and JetBlue (JBLU) losing a substantial 7.9%. These dramatic swings highlight the sector's sensitivity to even slight shifts in travel demand, fuel prices, and economic data.

One of the key factors driving Bernstein's cautious outlook is the threat of weakening travel demand. While airlines initially benefited from pent-up demand following the pandemic, there are growing signs that this surge is beginning to wane. Inflation, coupled with concerns about a potential economic slowdown, are prompting consumers to cut back on discretionary spending, including travel.

This shift in consumer behavior is forcing airlines to reassess their capacity plans and adjust their pricing strategies. Both Delta and United have already announced slower capacity growth for the second half of 2025 in response to these demand concerns.

Fuel prices are another significant headwind for the airline industry. The recent spike in oil prices is putting pressure on airlines' bottom lines, as fuel is one of their largest operating expenses. Airlines are attempting to offset these higher costs by raising fares, but this strategy can be challenging in a competitive market, particularly if demand is already softening. Bernstein analysts noted that airlines can attempt to push fuel prices through fares, but that is harder in a supply-driven fuel shock.

The duration of the current crisis remains a key unknown, and its impact on the summer travel season could be significant.