Delta and United up the stakes on product segmentation as their competitive edge continues to grow

Alaska Air expects Boeing's 737 MAX 10 to be certified by late September, with delivery of its first aircraft planned for spring 2024. The airline aims to start passenger service between April and mid-May, according to COO Jason Berry.

UBS raised its price target for Delta Air Lines (DAL) to $105 from $99, maintaining a Buy rating. The firm cites strong demand and pricing power but notes fuel price spikes may cut estimates. This update comes ahead of Q3 results.

Redburn upgraded Southwest Airlines (LUV) to Neutral, raising its price target to $40. The firm cited valuation improvements and stronger-than-expected ancillary revenue growth. Redburn maintains Buy ratings on Delta (DAL) and United (UAL), favoring their international networks and capacity discipline. Institutional interest increased for all three carriers, with Southwest having the highest short interest.

American, United, and Southwest Airlines are reducing flight capacity due to a surge in jet fuel costs, which is expected to add $1B to American's Q4 fuel expenses. The airlines are evaluating less profitable routes, potentially leading to fewer flight options and higher fares for travelers. Fuel prices have risen due to geopolitical tensions, with the global average jet fuel price increasing by 7.4% to $194.90/bbl.

Delta Air Lines is investing $2.3 billion to expand its hub at Los Angeles International Airport (LAX), aiming for 200 daily flights to nearly 70 destinations by summer 2027. New routes include Philadelphia and Monterey, with increased frequencies to major cities. The investment focuses on premium facilities, including expanded Sky Clubs and Delta One suites on Airbus A350-900s. LAX is also being positioned as a gateway to Asia and Oceania, with new routes to Hong Kong, Shanghai, and Manila.

Redburn reiterated Buy ratings on Delta (DAL) and United (UAL), upgrading Southwest (LUV) to Neutral, citing strong demand and unit revenue growth. The firm raised jet fuel cost forecasts but expects 2027 earnings to exceed consensus for DAL and UAL, with target prices of $105 and $150, respectively. LUV's target is $40.