North American Airlines: Fuel lower, estimates higher; our focus now is on capacity and DAL rerating; Upgrading our LUV and UAL Credit Ratings

Research evidence excerpt

North American Airlines: Fuel lower, estimates higher; our focus now is on capacity and DAL rerating; Upgrading our LUV and UAL Credit Ratings

J P M O R G A N North America Fundamental

Research

17 June 2026

North American Airlines

Fuel lower, estimates higher; our focus now is on

capacity and DAL rerating; Upgrading our LUV and UAL

Credit Ratings

We’ll start with the obvious: fuel prices are retreating and airline equities are Airlines

ACrallying. In our view, a permanent cessation of Mideast hostilities seems more Jamie Baker

likely than at any recent point, but is not assured. Assuming peace does hold, we (1-212) 622-6713

suggest investors focus on two salient topics: upward capacity creep (given its read jamie.baker@jpmorgan.com

through to RASM) and what may be the long-awaited rerating in Delta equity and James M Kirby

what that portends for others. That’s not to suggest turning a blind eye to consumer (1-212) 622-8297

resilience or where fuel ultimately settles, merely our view that capacity james.m.kirby@jpmchase.com

monitoring should take on increased focus as economic pressures abate. In other Mark Streeter, CFA AC

words, use domestic schedules as of June 15th as one’s baseline, but obviously treat (1-212) 834-5086

mark.streeter@jpmorgan.com

4Q with some wiggle room given capacity analysis beyond 4-5 months requires J.P. Morgan Securities LLC

considerable nuance. Turning to DAL, shares have now drifted slightly past their

consensus target, which would ordinarily imply either 2027 estimates are too low,

or we’re potentially on the cusp of a sell-side downgrade cycle. However, we’d

posit a third possibility, that being DAL’s valuation may be beginning to exhibit the

rerating characteristics we’ve long argued in favor of, given the industry’s post-