Raymond James cuts Delta and JetBlue ratings ahead of Q2 earnings

Investing.com -- Raymond James made two rating changes in the U.S. airline sector ahead of second-quarter earnings, downgrading Delta Air Lines from Strong Buy to Outperform and cutting JetBlue Airways to Underperform from Market Perform in a note to clients on Monday.

Analyst Savanthi Syth said Delta remains "a top pick for long-term investors," supported by structural advantages over network peers, a strong balance sheet and balanced capital deployment, including a recent 15% dividend increase.

However, she said "the recent run-up in shares" and "somewhat narrower near-term upside valuation" prompted the rating change.

The JetBlue downgrade was more cautious in tone, with Syth stating that while JetBlue and Frontier are "the biggest beneficiaries of Spirit's recent demise," JetBlue shares are constrained by approximately $6.12 conversion price on its convertible debt.

Raymond James said it does not anticipate liquidity concerns at JetBlue in 2026 absent further macro shocks, but said "the more prudent course of action would be to address the capital structure via a Chapter 11 restructuring," calling it "unattractive for current equity holders."

More broadly, Raymond James revised its jet fuel forecast lower for the second through fourth quarters of 2026, reflecting a steeper pullback from the Middle East conflict peak than seen during the 2022 Russia-Ukraine crisis.

The firm said demand and pricing trends remain strong, with U.S. average second-quarter close-in fares rising 29.1% year-on-year and leisure fares up 36.1%.

Raymond James said its forecasts assume crude prices above the forward curve, with downside risk if demand falters or industry capacity discipline breaks down.

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