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Airlines Set for 2026 Rebound: Supermajors Lead
9 Dec
Summary
- Airline industry faces headwinds, impacting demand significantly.
- Citi predicts a broad industry recovery starting in 2026.
- Supermajors, with strong advantages, to lead the rebound.
The airline sector has navigated numerous challenges over the past year, including operational disruptions, adverse weather patterns, and evolving tariff policies. A recent government shutdown affecting air traffic control further exacerbated these issues, leading to weaker performance across the industry. Conditions are expected to improve significantly, with a broad recovery anticipated by 2026.
Looking ahead, Citi analyst John Godyn projects an "elongated mid-cycle" starting in 2026, which should benefit all airlines. However, he specifically highlights the "supermajors"—the largest legacy carriers—as likely to be the greatest beneficiaries. These carriers possess distinct advantages such as strong hub positions, international route leadership, extensive networks, and robust loyalty programs.
While the entire sector is expected to rebound, Godyn's analysis suggests that the supermajors offer the most favorable risk/reward profile. Conversely, legacy low-cost carriers are seen as relative underperformers. Niche carriers will be evaluated individually as the situation develops.
