Morgan Stanley recently released a research report on the North American aviation industry, summarizing key developments in the sector over the past week, including potential merger and acquisition transactions, government long-term strategies, frequent flyer program adjustments, and executive changes. The report also provides detailed capacity data, consumer surveys, and individual stock investment rating analyses.
Summary of Core News Highlights
Potential Industry Consolidation: It was reported that Spirit Airlines, currently under bankruptcy protection, and Frontier Airlines (ULCC.US) are in discussions regarding a potential merger. Sources indicated that the deal could be announced as early as this month, but neither party has made public comments. The two companies have engaged in talks multiple times since at least 2022, though no agreement was reached previously.
National Strategy Release: The U.S. Department of Transportation (DOT) issued the '2026-2036 National Strategy for Advanced Air Mobility,' aiming to accelerate the research, development, and deployment of Advanced Air Mobility (AAM) technologies through coordinated actions among federal, state, local, and tribal governments. Focused on safety, security, defense, and economic competitiveness, the strategy sets phased development goals: completing demonstration operations using existing airport infrastructure by 2027, fostering a domestic supply chain for automation and avionics; expanding AAM operations in urban and rural areas by 2030, promoting private investment in vertiport construction and modernization of low-altitude air traffic control systems; achieving advanced capabilities such as fully autonomous flight by 2035, solidifying the United States' leadership in aircraft manufacturing and global aviation trade.
Tightening of loyalty programs: $American Airlines (AAL.US)$It was announced that, starting from mid-December 2025, passengers purchasing basic economy tickets will no longer earn AAdvantage miles or elite qualification points. This move strengthens the restrictions on its basic economy product, aligning it with competitors such as Delta Air Lines, which have already implemented similar policies.$Delta Air Lines (DAL.US)$aligning it with competitors such as Delta Air Lines, which have already implemented similar policies.
Executive Leadership Change: Delta Air Lines President Glen Hauenstein will retire on February 28, 2026, after more than 20 years with the company, during which he significantly influenced route planning and commercial strategy. His successor will be Joe Esposito, the current Senior Vice President.
Market and Consumer Insights
According to OAG data, the capacity planning for major North American airlines in the second quarter of 2026 shows differentiated adjustments: American Airlines' short-haul international route capacity increased by 7.6% year-over-year; $United Airlines (UAL.US)$ domestic route capacity grew by 9.0%, while short-haul international route capacity increased by 1.6% year-over-year;$JetBlue Airways (JBLU.US)$short-haul international route capacity increased by 11.9% year-over-year, while long-haul international route capacity grew by 12.2%.
In terms of consumer demand, an AlphaWise survey revealed that 58% of consumers plan to travel within the next six months, slightly down from 62% in the same period last year but higher than last month's figure. Corporate travel spending ranked highest among various travel needs, with international travel intentions surpassing domestic travel for the first time. Income segmentation is evident, with 79% of households earning over $150,000 annually intending to travel. Additionally, significant increases were observed in travel intentions among income groups earning $25,000-$49,000 and those above $100,000, indicating resilience in travel demand across all income levels.
Investment Views and Stock Ratings
Morgan Stanley maintains an "attractive" outlook for the North American aviation industry. The report updates stock ratings, target prices, and risk-return analyses for nine major airlines under coverage:$Alaska Air (ALK.US)$、 $American Airlines (AAL.US)$ 、 $Delta Air Lines (DAL.US)$ 、 $United Airlines (UAL.US)$ 、$Southwest Airlines (LUV.US)$、$Sun Country Airlines (SNCY.US)$received an "overweight" rating,$Allegiant Travel (ALGT.US)$、 $Frontier Group (ULCC.US)$ 、 $JetBlue Airways (JBLU.US)$ were given a 'Hold' rating.
The report emphasized that $Delta Air Lines (DAL.US)$ is highly favored for its robust balance sheet and leading customer loyalty program; $United Airlines (UAL.US)$ stands out in terms of execution; and $Southwest Airlines (LUV.US)$ the key focus for 2026 will be the successful launch of its new designated seating system.
Editor/Doris