U.S. airline stocks remain under pressure from elevated jet fuel prices, but TD Cowen has identified its top picks in the sector, maintaining Buy ratings while trimming earnings estimates for major carriers. Analyst Tom Fitzgerald reduced profit projections for the six largest U.S. airlines and SkyWest, extending forecasts to 2028 to reflect current fuel costs and capacity plans.
Fuel expenses have risen, though demand remains resilient, particularly from corporate travelers. While leisure demand may soften among price-sensitive passengers, strong corporate bookings are expected to sustain revenue through the fall. Fitzgerald emphasized airlines with strong balance sheets and diversified revenue streams—spanning corporate, premium, international, and loyalty segments—as the most resilient in the current environment.
TD Cowen’s top choice is United Airlines, which retained its Buy rating and was designated the brokerage’s best idea for 2026. The airline’s long-haul international network and exposure to premium, corporate, and loyalty revenues position it favorably, Fitzgerald noted. United’s price target was cut to $192, or roughly 13 times estimated 2027 earnings per share. The company recently reported second-quarter adjusted earnings per share of $1.99, topping expectations, and raised the lower end of its full-year 2026 guidance. Following those results, Bernstein SocGen Group increased its target to $162 with an Outperform rating.
Delta Air Lines, ranked second among TD Cowen’s top picks, also retained its Buy rating. Its diversified revenue base—including a growing maintenance and repair business, a leading loyalty program, and strong premium exposure—supports its resilience. Delta’s price target was reduced to $105, or about 14 times estimated 2027 earnings per share. The carrier is on track to achieve its gross leverage target of 1x in the coming years and maintains the strongest balance sheet in the sector. Growth initiatives include expansion in Asia-Pacific, Africa, the Middle East, and a new hub in Austin, Texas.
The analyst’s rankings come as airlines navigate a mixed demand backdrop. While corporate travel remains robust, discretionary leisure spending may wane as fuel-driven ticket prices rise. Fitzgerald’s framework prioritizes carriers with the flexibility to absorb cost pressures while leveraging diversified income streams to offset volatility in fuel markets.
