UBS Analysts Downgrade Airlines Amid Recession Fears

UBS analysts on Monday downgraded and cut their price targets for a number of airlines amid concerns that the Trump administration’s tariffs will drive the U.S. economy into a recession.

The analysts downgraded Delta Air Lines (DAL), Alaska Air Group (ALK), and United Airlines (UAL) to “neutral” from “buy” ratings. Worsening consumer sentiment and the global impact of tariffs appear “likely to cause deterioration in both international and premium segments which is a significant risk” for the three downgraded airlines, the analysts wrote.

UBS now has “neutral” ratings on most of the U.S.-based carriers—including American Airlines (AAL), Southwest Airlines (LUV), Frontier Group Holdings (ULCC), and Allegiant Travel (ALGT)—with a “sell” rating on JetBlue Airways (JBLU). The analysts cut their price targets for all eight of the airline stocks, with the largest cuts at Delta (to $42 from $77) and United (to $59 from $107).

UBS Expects Some Airlines May Suspend Full-Year Projections Amid Uncertainty

With airlines reporting quarterly results in the coming weeks, starting with Delta on Wednesday, the analysts said they expect that some may suspend their full-year projections amid economic uncertainty. Several airlines have lowered their outlooks for first-quarter revenue and other metrics.

“While the uncertainty is obviously large from a macro perspective, considering the weakening in domestic leisure and slowing in corporate travel growth already observed in Feb / March and the rising risk from the impact of large tariffs, we believe it makes sense to factor in a backdrop of worsened economic performance,” the analysts wrote.

Elsewhere in the sector Monday, Spirit Airlines said its CEO Ted Christie is stepping down, effective immediately, as part of an executive reshuffling, weeks after the airline exited its bankruptcy restructuring.