Citigroup: Three major "super carriers" will usher in a "super cycle" as American Airlines Group Inc. (AAL.US), Delta (DAL.US), and United Airlines (UAL.US) are poised for takeoff.

A study by Citigroup pointed out that the poor performance of the aviation industry and capacity cuts in 2025 have created a "tactically bullish cycle environment" for 2026, especially for the giants it refers to as "super airlines". The institution predicts that their outstanding performance will be more resilient and sustainable than the most optimistic expectations. Citigroup analyst John Godyn defines traditional airlines such as American Airlines Group Inc. (AAL.US), Delta Air Lines, Inc. (DAL.US), and United Airlines (UAL.US) as "super airlines," believing that their core strengths lie in "successfully integrating new travel business models with unique asset portfolios, and these asset barriers are hard to replicate for both existing competitors and new entrants." As demonstrated by these super airlines, this business model enables them to perform well in both industry downturns and upturns. In contrast, the business model of traditional low-cost airlines (LLCC) was mainly developed and perfected under conditions and assumptions that are different from today's market characteristics. They serve a class of passengers who choose airlines solely based on the lowest ticket prices and basic services. However, as this easily replicable business model saturates the market, and airlines can no longer stimulate demand through lower ticket prices, traditional low-cost airlines are now undergoing restructuring through transformation plans. These plans heavily borrow from the practices of super airlines, but lack the "differentiated asset advantages accumulated over decades of investment by super airlines." Therefore, this expected "super airline super cycle" will further widen the gap that has already formed between super airlines and traditional low-cost airlines since the COVID-19 pandemic, and will be more favorable to super airlines. Godyn further points out: "Although most super airlines have achieved significant excess returns in the recent downturn cycle of the aviation industry, as the industry cycle accelerates towards recovery, their profit elasticity on the upside may still exceed investor expectations." Of the three airlines (United Airlines, American Airlines Group Inc., Delta Air Lines, Inc.) recommended by Citigroup for a "buy" rating, Delta Air Lines, Inc. is the only target that Godyn has removed the "high risk" rating from, which "fully reflects the continued sustainability and stability of its long-term strategy." Godyn predicts that United Airlines will become the company with the largest per-share earnings breakthrough compared to 2019 peak values, leveraging its international route advantage; and if American Airlines Group Inc. can effectively execute its strategy, regain market share in business travel and high-end travel, it will have the most significant upside potential among the three. Although Alaska Air Group, Inc. (ALK.US) is not a super airline in strict terms, Godyn still gives it a "buy" rating because the company's management's strategic plan "clearly aims to further strengthen its core competitiveness as a quasi-super airline." Meanwhile, traditional low-cost airlines JetBlue Airways Corporation (JBLU.US) and Southwest Airlines Co. (LUV.US) are trying to reshape their business models in a similar way to traditional airlines. For JetBlue Airways Corporation, its "JetForward" plan may bring substantial stock price increases, but until there is a noticeable improvement in performance, Godyn still maintains a "sell/high risk" rating on the stock. For Southwest Airlines Co., due to the presence of vocal activist investors, Godyn's questioning of its transformation plan is lower than JetBlue Airways Corporation, giving it a "neutral/high risk" rating. However, should Southwest Airlines Co. mimic its operating strategy without the core advantages of super airlines, it may lead to "exceptionally significant brand/customer perception mismatches and execution risks."