U.S. low-cost airlines are under mounting pressure and, despite heavy losses, the stocks are best avoided.
Contrasting Carriers In contrast, the network carriers— United Airlines, Delta Air Lines, and American Airlines have comfortably returned to profitability since the Covid-19 pandemic—aided by a shift to premium economy travel and surging international demand. Citi analysts removed their last remaining Buy rating on a U.S. low-cost carrier last month, downgrading Frontier to Neutral. Trent said it was tough to see the picture improving in the fourth quarter, adding that oil prices and labor costs were “going the wrong way.”
Given there’s greater pilot availability in Europe, industry pay levels have not jumped to the same extent as in the U.S., where a lack of aviators has been a key bargaining chip for pilot unions. Therefore, European airlines are not battling the same labor cost pressures as their American counterparts.