Cites potential upside surprises resulting from merger. Highlights.
Consolidation doesn’t eliminate earnings risk from all macro factors, but competitive detente should soften the swings of the cycle to permit industry profits even with crude at $115.
Aggressive capacity cuts by DL & NW along with Delta’s tentative agreement with pilots prompt upgrades of both carriers. While we do not yet have an announcement, we assign a 98% probability predicated in part on our industry thesis above, but also our belief that DL/NW mgmt teams have a desire to move ahead.
CS must have factored in huge cost savings from economies of scale and synergies to generate this kind of optimism. With fuel prices heading into the stratosphere and a recession looming, it’s difficult to see how these already struggling carriers will succeed.
Business Insider Emails & Alerts
Site highlights each day to your inbox.