Airline Numbers Lifted Sharply at Imperial Capital on 27% Plunge in Jet Fuel Costs (DAL) (JBLU) (UAL) (more...)

Imperial Capital analyst Bof McAdoo lifted estimates and price targets across their airline coverage group Wednesday, to reflect the sharp decline in crude oil and jet fuel prices. McAdoo notes New York Harbor spot jet fuel has most recently been trading down more than 27% from the average Q3 levels and down more than 30% from last year's Q4 levels. Fuel cost have historically represented between 30-40% of total airline operating costs, he notes, which suggests the recent decline should drive meaningfully operating results and EPS improvement across the industry.

Price Target Hikes:

• Air Canada (T. AC) (Outperform) from $16 to $22
• Alaska Air Group (NYSE: ALK) (Outperform) from $60 to $69
• Allegiant Travel (NASDAQ: ALGT) (Outperform) from $160 to $196
• American Airlines Group (NASDAQ: AAL) (Outperform) from $58 to $72
• Copa Holdings (NYSE: CPA) (Outperform) from $135 to $152
• Delta Air Lines (NYSE: DAL) (Outperform) from $53 to $69
• Hawaiian Holdings (NASDAQ: HA) (In-Line) from $15 to $22
• JetBlue Airways (NASDAQ: JBLU) (Outperform) from $16 to $20
• Southwest Airlines (NYSE: LUV) (Outperform) from $48 to $53
• Spirit Airlines (NASDAQ: SAVE) (Outperform) from $92 to $100
• United Airlines (NYSE: UAL) (In-Line) from $47 to $63

McAddo doesn't see the fuel costs savings being passed on to the consumer. "We disagree with the view that many investors, analysts, and press accounts have embraced that suggest fuel cost savings will generally be passed along to consumers through lower ticket prices," he said. "While this may have occurred in the past, recent management comments suggest that capacity discipline will continue and thus 85+% load factors will continue therefore negating the incentive to cut fares to fill seats."

For an analyst ratings summary and ratings history on Delta Air Lines click here. For more ratings news on Delta Air Lines click here.

Shares of Delta Air Lines closed at $46.33 yesterday.

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