Jefferies has identified two U.S. network carriers as its top investment choices in the airline sector, placing Delta Air Lines at the top of its list and naming United Airlines as its second preference. The firm's assessment emphasizes operational and financial attributes that, in Jefferies' view, support stronger profitability at these carriers compared with peers.
Delta Air Lines (DAL)
Jefferies designates Delta as its preferred airline stock, citing a premium-oriented business model and a resilient earnings profile. The firm highlights Delta's ability to generate a larger share of revenue from premium cabins, loyalty programs and corporate travel, which it says reduces earnings exposure to fluctuations in economy-class ticket pricing. In addition, Jefferies points to Delta's partnership economics, including a long-standing co-branded credit card arrangement with American Express, as a source of high-margin recurring revenue.
The investment case also rests on Delta's operating margin performance. Jefferies notes that Delta consistently posts the highest operating margins among major U.S. network carriers, a metric the firm views as indicative of superior profitability relative to competitors. Recent company actions and analyst reactions were also noted: Delta announced a 15% increase to its quarterly dividend, and UBS and Bernstein raised their price targets on the stock, with both analysts citing a favorable earnings outlook and sustained demand strength.
United Airlines (UAL)
United is Jefferies' second-favorite airline pick, with the firm's rationale focused on margin expansion and international network advantages. Jefferies underscores United's position as the U.S. carrier with the largest international route network, particularly across the Atlantic and Pacific, which the firm considers a meaningful competitive asset for driving revenue on long-haul markets.
The firm highlights several internal initiatives that support United's investment case: continued premium cabin growth through investments such as Polaris business class and other premium seating, ongoing fleet modernization via delivery of newer aircraft with expected gains in fuel efficiency and lower maintenance costs over time, and operational improvements intended to drive better execution and cost discipline. Jefferies also flagged that UBS increased its price target on United, citing a strong earnings outlook. Separately, United has begun installing Starlink Wi-Fi service on its widebody aircraft operating transatlantic flights, a development noted by the firm.
Context and analyst emphasis
Across both recommendations, Jefferies emphasizes revenue mix and margin dynamics as central to its preferences. For Delta, recurring, higher-margin streams such as loyalty programs and premium travel underpin the thesis. For United, the combination of a broad international footprint, premium product investments and a modernizing fleet form the basis for projected margin improvement.
Summary takeaway
Jefferies' top picks reflect a focus on carriers with structural advantages that can support profitability through both revenue composition and cost-related improvements. The firm points to recent corporate moves and analyst target revisions to underscore its outlook for both Delta and United.