Credit Calls

Research evidence excerpt

Credit Calls

Tarek Hamid AC North America Credit Research

(1-212) 834-5468 17 June 2026 J P M O R G A N

tarek.x.hamid@jpmorgan.com

North American Airlines: Fuel lower, estimates higher; our focus now is on capacity and

DAL rerating; Upgrading our LUV and UAL Credit Ratings (Jamie Baker / Mark

Streeter, CFA)

We’ll start with the obvious: fuel prices are retreating and airline equities are rallying. In our

view, a permanent cessation of Mideast hostilities seems more likely than at any recent point,

but is not assured. Assuming peace does hold, we suggest investors focus on two salient

topics: upward capacity creep (given its read through to RASM) and what may be the long-

awaited rerating in Delta equity and what that portends for others. That’s not to suggest

turning a blind eye to consumer resilience or where fuel ultimately settles, merely our view

that capacity monitoring should take on increased focus as economic pressures abate. In other

words, use domestic schedules as of June 15th as one’s baseline, but obviously treat 4Q with

some wiggle room given capacity analysis beyond 4-5 months requires 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-COVID restructuring. While estimate housekeeping may lie at the root of

today’s exercise, it’s actually the least important takeaway for us. Far more pressing, in our

view, is the industry’s ability to hold on to recent yield gains. With no deluge of deliveries