According to TheFly, Rothschild sees a stronger airline revenue backdrop into next year, while the FAA’s planned AI rollout targets the operational disruptions that continue to weigh on carriers.

  • Rothschild raised its target for AAL to $13.50 and kept a ‘Neutral’ rating.
  • The raised its target for DAL to $105 and maintained a ‘Buy’ rating.
  • For UAL, Rothschild cut the target to $150 from $165 but still kept a ‘Buy’ rating.

Airline stocks, including American Airlines Group Inc. (AAL), United Airlines Holdings Inc. (UAL) and Delta Air Lines Inc. (DAL), drew fresh analyst attention as Rothschild & Co Redburn said it sees a “strong sector backdrop” for U.S. airlines, according to TheFly.

The firm used the same broader industry thesis across all three carriers, expecting domestic unit revenue expansion to continue into next year as capacity remains constrained, competition from low-cost carriers softens and premium demand stays strong, per TheFly. The stock-specific actions, however, differed.

Rothschild raised its AAL stock price target to $13.50 from $12.50 and maintained a ‘Neutral’ rating. It also raised its DAL target to $105 from $104 and kept a ‘Buy’ rating. For UAL stock, however, analyst James Goodall lowered the price target to $150 from $165, but maintained a ‘Buy’ rating, according to TheFly.

Rothschild Sees Capacity Supporting Airline Revenue

The firm’s sector view centers on a more disciplined domestic supply environment. Capacity constraints could support pricing and unit revenues, while softer competition from low-cost carriers provides another tailwind. 

Rothschild also highlighted continued strength in premium demand, which has become an increasingly important revenue driver for major network airlines, per TheFly.

FAA Turns To AI To Reduce Flight Disruptions

The analyst calls come as the Federal Aviation Administration (FAA) prepares a major technology change aimed at improving how U.S. airspace is managed. 

The FAA could begin deploying its Smart AI-powered air-traffic management system in the Washington, D.C., region as soon as Monday, Sept. 21, before eventually expanding it nationwide, according to a Wall Street Journal report.

Smart is designed to help the FAA and airlines anticipate congestion and find more efficient routes when weather or other disruptions affect traffic. Air Space Intelligence won a $875 million, 12-year contract to develop Smart and a related air-traffic system, the report noted.

The FAA has said the technology will use information including airline schedules, weather, airport capacity and airspace conditions to identify potential conflicts before aircraft depart.

Retail Sentiment Around Airline Stocks

Retail sentiment around AAL stock was ‘neutral’ on Stocktwits, while sentiment around UAL and DAL was ‘bearish’ amid high message volumes.

So far this year, American Airlines stock has fallen more than 16%, United Airlines has fallen more than 4%, and Delta Air Lines shares have gained more than 15%. 

In comparison, the US Global Jets ETF (JETS), which holds all three stocks, has remained marginally in the red over the same period.

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