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The next cycle of recovery for airlines will be international and business travel, Citigroup analyst Stephen Trent said Monday on CNBC s Squawk Box.
From a risk-reward perspective, the three airline stocks that still look attractive to the analyst at current levels are
Delta Air Lines, Inc. (NYSE: DAL),
United Airlines Holdings Inc (NASDAQ: UAL) and
Frontier Group Holdings Inc (NASDAQ: ULCC).
Delta recently reported first-quarter earnings of -$3.55 per share, which came in below the estimate of -$3.13.
Its operating profit is expected to reach US$1.5 billion while the adjusted operating margin target has been set at 20 per cent. We know exactly where we are and (our model) is more and more predictable, CEO Eric Martel said during an investor presentation. Revenues will be more balanced thanks to the after-sales segment.
The 2025 targets are rather ambitious, said Citigroup analyst Stephen Trent in a note to clients. The market will have to assess whether (the new management of) Bombardier can achieve its long-term goals compared to the failure of the previous team.
Repair and maintenance of aircraft already in service, where margins are high, represent nearly 18 per cent of Bombardier s revenues, which were approximately US$6.5 billion last year.