Citi Reiterating Buy on UAL, DAL, AAL

The analyst comments "It seems unlikely that today’s market volatility will be the baseline for the remainder of the year. Although it is also hard to imagine that US tariff turmoil won’t finally hit a breaking point, predicting exactly when or how we get there is another matter. So long as current conditions persist, US network airline stock price volatility appears unlikely to subside. Although our estimates are unchanged, the downside sensitivity analysis in this note might help investors further frame the above risks. Citi sees positive, fundamental outlook for Buy-rated United, American and Delta, once the dust finally clears on the current turmoil, with Sell-rated Southwest Airlines’ poor FCF outlook appearing more concerning. Upcoming 1Q results — With Delta Air Lines set to report this Wednesday morning (Apr 9th), and rival United up next (Apr 15th, after the close), management commentary on the demand outlook should be key. This commentary might include, for example, whether US consumer demand for overseas trips is holding up – as foreign demand for US flights from some (but not all) regions seems to be softening. Among other factors, capacity cuts could help mitigate downside demand risks, while tariffs might also further constrain airline capacity."