US AIRLINE SUMMARY: Revenue forecasts upgraded, betting on air travel recovery following Omicron

Delta Airlines (DAL)

• Raised March-quarter revenue outlook to about 78% recovered vs 2019.
• March-quarter expectations: Positive FCF, Solid pre-tax profit, Flat TRASM vs 2019.
• Expects to deliver meaningful profitability in 2022.

Commentary

• Well positioned to recapture higher fuel prices.
• Needs to recapture between USD 15-20 each way on average ticket value of around USD 200 to compensate for higher fuel costs.
• Virgin Atlantic CEO said they are seeing very good signs of recovery despite Ukraine.
• Delta CEO says demand has held up very strong and they haven't seen an impact on US Travellers coming to Europe; is not nervous about the price of oil for the airline industry.
• Can get through the Summer with current cash levels.

United Airlines (UAL)

• Expects Q1-2022 CASM-ex to increase 18% vs 2019 (prev. saw between 14-15%).
• Expects Q1 total operating revenue to be towards the better end of prior -20 to -25% guidance vs. Q1 2019.
• Expects Q1 capacity to be down around 19% vs Q1-2019, below prior guidance of down 16-18%.

Commentary

• Following the COVID peak for Omicron, demand for travel exceeded prior expectations.
• Business traffic rebound faster than expected.

Southwest Airlines (LUV)

• Sees Q1 Available Seat Miles -9 to -10% vs 2019.
• Affirms FY22 capacity view to be down c. 4% vs 2019.
• Raises Q1 operating revenue view to -10 to -8% vs 2019 (prev. -15 to -10%).
• Expect Q2 capacity to be down c.7% vs 2019.
• H2-2022 capacity to be roughly flat vs H2-2019.
• Continues to expect to be profitable in the remaining three quarters and for FY22.
• Q1 fuel hedging cash settlement gains per gallon USD 0.52.

Commentary

• Has seen improvements in revenue trends in March 2022 as COVID cases trend downwards.
• Current leisure trends for spring break travel are strong and above 2019 levels.
• Continues to experience cost pressure due to inflation in labour rates and airport costs.

JetBlue (JBLU)

• Raises Q1 revenue view to -9 to -6% (prev. -16 to -11%) vs 2019 levels due to strong demand.
• Cuts capacity to -1% vs Q1 19 (prev. -1 to +2%).
• Continues to expect CASM ex-fuel to rise between 13-15% vs 2019 levels.

American Airlines (AAL)

• Expects Q1-2022 revenue view to be down roughly 17% vs 2019 (prev. saw -20 to -22% vs 2019).
• Expects Q1 capacity to be down 10-12%.
• Q1 total CASM ex-fuel and net special items expected +11-13%.
• Expects to end Q1 with total available liquidity of above USD 15bln.

Commentary

• Improvement in Q1 revenue is expected to more than offset increases in fuel and other expenses in the quarter.
• Will continue to be fully exposed to fluctuations in aircraft fuel prices.

(LAST WEEK)

Alaska Airlines (ALK)

• Raised Q1 fuel cost expectations to USD 2.6-2.65/gallon (prev. USD 2.45-2.50.gallon).
• Expects capacity to be down 3-5% in H1-2022.
• Continues to plan for a return of 100% pre-COVID capacity by Summer, followed by growth in H2-2022.