Airlines 2Q Preview

Research evidence excerpt

Airlines 2Q Preview

Airlines

Domestic Airlines - Market Weight

Legacy Airlines - Market Overweight

Airlines 2Q Preview July 15, 2026

How Long Can it Last?

The Wolfe Byte

In today's 100-page slide deck, we update our Airline EPS estimates ahead of 2Q earnings. We also review key

capacity, demand and pricing trends for the airlines, and more...

●Airline 2Q Preview. Airline demand and pricing commentary remained very strong throughout 2Q, while jet fuel

prices steadily declined throughout the quarter. Following DAL's report last week, our updated 2Q EPS estimates

are above Consensus for LUV and UAL, but modestly below Consensus for the others.

●Bad Timing for Another Jet Fuel Spike. DAL reported last week and guided to a further acceleration in RASM y/

y in 3Q vs. 2Q. We expect a similar outcome for almost all the airlines this quarter. With accelerating RASM and

falling jet fuel prices, Street estimates for 3Q have moved materially higher the past few weeks. But jet fuel prices

have spiked again with resumed Iran tensions. So as we update our models today to reflect higher jet fuel prices,

our 3Q EPS estimates are below Consensus for everyone with the most downside to Consensus for ALGT, ULCC

and AAL. That being said, our 3Q revenue assumptions are generally above Consensus with accelerating RASM.

We see the most revenue upside potential relative to Consensus in 3Q for UAL, JBLU and ALK.

●Less Risk, Higher Valuations? When the war in Iran first started and jet fuel prices surged, we initially expected

that every airline would be unprofitable this year. But the industry's revenue recapture has been far better than

we initially expected. This suggests to us that these businesses are somewhat less exposed to fuel shocks and