Goldman Sachs analysts said Wednesday that they remain “positive on the path to profitability” for US airlines, but that profits may be slow to return amid fuel oil prices and worse-than-expected revenue.
Analysts led by Katherine O’Brien lowered their expectations for the industry by the end of 2021 and 2022 and downgraded their ratings on shares of Jet Blue Airways Corporation JBLU,
And American Airlines Group Inc. AAL,
Goldman equated JetBlue stock to Hold from the purchase, saying “since we expect that the costly industrial value associated with its American partnership will outweigh the revenue advantages in the environment,” is a reason for a “slow return to profitability”.
See also: US airlines fail to boost business travel expectations
Analysts have set a 17 price target on the stock, which means it is up 5% from Wednesday’s price.
American Airlines has received a downgrade to sell from its stock equivalent. Analysts said the company’s shares are expected to be lower as “relatively higher operating leverage depends on its profitability recovery”. They set a price target of 18 18 on the stock, which is a negative side of about 16%.
Analysts say the larger industry is slowly moving toward less aviation business travel.
Related: DOJ report prepares to sue American Airlines, JetBlue stock alliance
This combined with higher jet-fuel prices and rising costs and expenses led Goldman to reduce its quarterly outlook on the industry from the expected ুন 350 million profit before the cumulative consolidated net loss of $ 1.5 billion.
Goldman analysts said they forecast সমন্ব 8.1 billion in 2022, with consolidated net income down 18%.
“While we are cutting our near-term forecast, we remain positive about the industry despite this pressure,” analysts said. The industry is likely to return to margin 2019 levels by 2023 and improve in 2024 and 2025.
Don’t miss: United Airlines works all with ‘next’ fleet renewal, pledges 2 billion in savings
“We see 2022 as a year of recovery and expect investors to focus on stable revenue earnings in 2023 and beyond,” they said. Goldman maintained its buy rating on shares of Alaska Air Group Inc.
SkyWest Inc. SKYW,
Southwest Airlines Co. LUV,
Sun Country Airlines Holdings Inc. SNCY,
And United Airlines Holdings Inc. UAL,