Q2 Preview: Fuel Pulls Uno Reverse Card w/ EPS the Real Winner

Research evidence excerpt

Q2 Preview: Fuel Pulls Uno Reverse Card w/ EPS the Real Winner

USA | Airlines EquityJulyResearch1, 2026

KEY STOCKS FEATURED INCLUDE:Q2 Preview: Fuel Pulls Uno Reverse Card w/ EPS

TICKER RATING PRICE TARGETthe Real Winner

AAL HOLD $18.00

Q2 results track the midpoint to high-end of guides initiated in April as fuel AC CN HOLD C$26.00

moderates off peak levels, bolstered by broad-based demand. Q3 positioned for DAL BUY $105.00

material upwards EPS revision as we cut our fuel/gal est by 16% w/ RASM +Mid- LUV HOLD $50.00

Teens & CASM-ex +MSD, driving y-o-y operating margin expansion of ~300bps UAL BUY $160.00

on average. AAL most torque to upside on lower fuel; prefer DAL/UAL on more

durable business models against choppy backdrop; raising FY EPS by 20+% for

both.

KEY CHANGES INCLUDE:

No Getting Off the Jet Fuel Roller Coaster. Per Argus, the US jet fuel index averaged $4.29/gal TICKER RATING PRICE TARGET

in the month of April (prior to tax/into-plane costs), +94% from the Jan avg of $2.21/gal. Jet fuel AAL HOLD $18.00 ($16.00)

prices have subsequently moved lower off the April peak falling to $2.80/gal on 6/26, but still up

AC CN HOLD C$26.00 (C$19.00)

~30% vs. Jan avg. Across our coverage, we reduced our Q2 jet fuel/gal estimate by -4% on avg, Q3

by -16%, Q4 -9% and FY26 -8%. DAL BUY $105.00 ($100.00)

LUV HOLD $50.00 ($44.00)

Q2 EPS Tracking the Midpoint to High-End of Guides. We forecast Q2 EPS guides across our

UAL BUY $160.00 ($112.00)

coverage to come in at the midpoint to high-end of guides initiated in April (no intra-quarter guidance

updates issued). Q2 results were bolstered by: 1) fuel moderating off the April highs; 2) broad-based

demand w/ consumers absorbing fares up 15-20% to cover higher fuel; and 3) US carriers were