Deutsche Bank has downgraded shares of Frontier Group Holdings Inc (NASDAQ:ULCC) and JetBlue Airways Corp (NASDAQ:JBLU) to “Hold” from “Buy” as signs of a slowdown in domestic discretionary air travel intensify. The move comes as the industry grapples with an emerging economic soft patch that could dampen consumer spending on low-fare flights.
Weakening Demand in Domestic Air Travel
Analysts at Deutsche Bank noted that the outlook for 2025 was built on high hopes that a favorable supply/demand balance would drive robust profit growth, based on 2024’s strong performance among industry profit leaders. However, recent economic releases indicate that consumer spending for flights—especially in the low-fare segment—is showing signs of weakness.
This emerging soft patch has prompted Deutsche Bank to adjust its outlook for domestic unit revenue. Consequently, the firm has lowered its price targets:
Frontier: Now set at $8, down from $12.
JetBlue: Now set at $7, reduced from $9.
Industry Differentiation and Relative Strengths
While domestic discretionary travel is facing headwinds, full-service carriers such as American, Delta, and United are seen as better positioned to weather the slowdown. Their diversified customer bases and lower price sensitivity provide some resilience compared to low-fare carriers.
Conversely, Deutsche Bank observed no significant signs of weakness in corporate or long-haul international travel. In addition, the bank maintained its “Buy” ratings on SkyWest (NASDAQ:SKYW) and Sun Country, citing their more resilient revenue streams.
For more detailed insights into recent price target adjustments and analyst sentiment, investors can refer to the Price Target Summary API and review changes in analyst recommendations using the Up/Down Grades API.
Looking Ahead
Deutsche Bank’s downgraded rating reflects growing caution as policy risks and a softening macroeconomic landscape weigh on investor sentiment. With domestic travel demand under pressure, market participants are advised to monitor shifts in consumer spending and broader economic trends closely.
As the air travel sector adjusts to these challenges, full-service carriers may continue to outperform in the near term, while low-fare carriers could face ongoing pressure if consumer confidence does not recover.
Investors should stay informed about evolving market dynamics through regular updates and data-driven insights from Financial Modeling Prep’s suite of APIs.
