US Airlines Gear Up for July 4: The Winners and Losers

All right, Steven, what what airlines are capturing all this demand? Yeah, absolutely. Good afternoon and thank you for having me. I think actually the network airlines are doing the best because they're in the right verticals. They do not rely on high volume, high utilization travel as you saw with the discount airlines pre pandemic. So we think about wallet share in the US airlines space. The network airlines are really doing the job, especially Delta and United. What about something like Southwest, which of course is facing pressure from activist investors and needs to rethink a whole lot of things, starting with its infrastructure? Yeah, they're in a little bit of a tougher spot. So SW, they've done a great job on the balance sheet, but operationally they've had problems. The post pandemic environment doesn't quite fit that model so well. We now have a lot more blended travel than we used to. So many US consumers no longer in the office five days a week. That has changed consumer behavior, including the way consumers purchase tickets. And the airlines that are doing very well these days happen to be the ones with very good exposure to premium travel, which is not Southwest. You have to wonder, too, Scarlet, about the capacity situation. What brings us to Boeing, right, facing potentially criminal fraud, charged with the DOJ also having to buy Spirit and absorb that as well. But all that means that the planes that need to deliver, like, aren't being delivered. And you have to wonder, like, is that good or bad for airlines? Yeah, that's a really good point. How do you factor that in? Because there's still a shortage of aircraft. And we know that when JetBlue tried to make its acquisition and couldn't get anywhere with it. Yeah, absolutely. That's tough. You know, certainly across the group. However, I would not say that the reaction of that is uniform. So if you go back to 2019 and you look at the size of the US economy relative to domestic capacity, you had a little bit less than $24.00 of economic activity for available seat mile in 2019. Last year you had over $29.00, this year we'll have over $30.00. So that dearth of equipment on a per capita basis should. Overtime get translated into higher unit revenue and higher fares, but not for everybody. We think it's going to be the premium airlines that are going to do well, mostly those two I mentioned, yeah. So those are your top picks, United and Delta, right? Yes, Delta, United and the US space, exactly. Panama and Copa Airlines, I'm also a huge fan.