- MorganStanley Analyst Ravi Shanker remains optimistic about the airlines into the first quarter reporting season and for the rest of 2023.
- Updates mid-quarter have effectively de-risked the 1Q and the focus will be on the 2Q guidance/comment, the analyst said.
- The analyst noted that mid-quarter updates from a couple of weeks ago were softer than expected but were mainly driven by idiosyncratic cost issues, mostly confined to Q1.
- The analyst said capacity constraints remain tight, which is bad news for CASMxF but good news for Price/RASM.
- According to the analyst, the key areas of focus would be sales trends and comments on the appointment booking curve.
- The international recovery with China’s reopening curve and the transatlantic pipeline outlook will also be important for legacy airlines.
- The analyst thinks American Airlines Group Inc EEL Operating performance was also relatively strong, recovering very quickly after a winter storm that impacted its main hub.
- For Southwest Airlines Co LUValthough Q1 was de-risked following the quarterly update, ongoing issues from December’s operational slump remain a hangover.
- The analyst expects Delta Airlines Inc DAL Operating margins set to be in the mid-point of the 4-6% guideline and hoping that the lengthening booking curve, the business travel picture in 2023 and the sustainability of demand and yields gain more color into the summer.
- The analyst lowered the price target from Alaska Air Group Inc ALK from $75 to $71 and raised the price target from United Airlines Holdings Inc UAL from $67 to $70.
- Some of the other important factors that the analyst will be looking at in the Q1 results are capacity constraints, summer operational reliability and jet fuel mark-to-market.
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