Delta, United Airlines could emerge as big winners on revenues in Q4

Full flights and busy airports are likely to continue in the US through the end of the year, Wall Street analysts warn. Demand is forecast to remain robust as corporate travel continues to recover, and consumers shift spending back to services — like air travel — after a pandemic switch to goods. Delta and United could benefit the most from these trends in the fourth quarter, according to a recent report from Raymond James. This is not to say that revenues will weaken at other US airlines, including American Airlines and Southwest Airlines, but more because Delta and United are more exposed to markets where the recovery has been slow but accelerated in recent months as more people return to offices and international markets reopen. “It appears there is greater demand recovery among large corporates and in the northeast in particular, which along with gradual reopening of long-haul international markets likely places [United] and [Delta] in a relatively stronger position in terms of revenue recovery,” Raymond James analyst Savanthi Syth wrote. New booking data from J.P. Morgan appears to confirm this view. In September, booked revenue for Q4 was “comfortably ahead of 2019” at American and United, analyst Jamie Baker wrote Thursday. He added that Delta is expected to see similar trends. A third point, and one beneficial to airlines, is consumers’ continued shift back to spending more on services. Melius Research analyst Conor Cunningham wrote Thursday that roughly 66% of consumer spending was on services in August compared to roughly 69 percent before Covid. He expects the percentage to revert to the pre-crisis norm in the months ahead. “This is an important theme as it speaks on steadily improving demand for travel given a shift in spending habits,” wrote Cunningham.<br/>