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Airline Ratings Shift: Delta Downgraded, JetBlue Faces Challenges
6 Jul
Summary
- Delta's rating lowered due to share price run-up and valuation.
- JetBlue's downgrade linked to convertible debt and potential restructuring.
- Analyst revises jet fuel forecast lower for the next two quarters.
Raymond James has revised its outlook on the U.S. airline sector, announcing rating changes for key carriers. Delta Air Lines saw its rating adjusted from Strong Buy to Outperform. The firm cited Delta's strong long-term fundamentals, including its balance sheet and capital deployment, but noted the recent share price increase and valuation limited near-term potential.
JetBlue Airways was downgraded to Underperform from Market Perform. While the airline is seen as a beneficiary of Spirit's recent challenges, its stock is reportedly constrained by convertible debt. Raymond James suggests that JetBlue might consider a Chapter 11 restructuring to address its capital structure, a move viewed as unfavorable for current shareholders.
In broader market analysis, Raymond James has lowered its jet fuel price forecast for the second through fourth quarters of 2026. This adjustment reflects a more significant pullback from recent peaks than observed during the 2022 Russia-Ukraine crisis. Despite this, demand and pricing trends in the airline industry remain robust, with second-quarter domestic fares showing substantial year-on-year increases.
