Group Higher Before Lower; Upgrading ALGT to Buy/High Risk: 2Q26 Quarterly Preview

研报英文原文证据摘录

Group Higher Before Lower; Upgrading ALGT to Buy/High Risk: 2Q26 Quarterly Preview

2Q26 Preview: Higher Before Lower; Upgrading ALGT to Buy/HR

• Largely Above Consensus in 2Q and Even More So in 3Q

• We believe the favorable supply/demand set-up in 3Q drives EPS beats across airlines

• Then our estimates become more divergent with respect to consensus on reaccelerating

ASM growth in 4Q26

• Supermajors Likely to Hold Onto Higher Relative Valuation, Low-Cost Carriers Less So

• Not all airlines will sustain recent, higher valuation multiples on those positive earnings

revisions

• Gone are the days where the airlines that are growing fastest get a premium multiple

• Instead, investors are likely to reward the companies whose earnings proved to be most

resilient during the shock with higher multiples – in other words, the supermajors (DAL,

UAL, and AAL)

• Early Reporters Likely Outperform Later Reporters

• Accelerating ASM growth into YE26 is the biggest risk

• The airlines most likely to grow ASMs fastest in 4Q26 are generally reporting later

• Updating ALGT model for SNCY, Upgrading to Buy/High Risk

1) Establishing new high-on-the-street 2027 and 2028 EPS estimates for ALGT

2) Accretion from the deal could exceed 25% over time (vs. mgmt guidance for “double-

digit % accretion”)

3) ALGT’s unique, niche business model which benefits from limited competition is well-

suited to protect and compound those profits rather than round trip them like many

airline mergers have historically done

Sources: Citi Research 2