JPMorgan Analyst Rules Out Long-Term Negative Impact Of COVID-19 On The Airline Industry

JP Morgan analyst Jamie Baker recently upgraded JetBlue Airways Corporation JBLU and Spirit Airlines Incorporated SAVE from Underweight to Overweight. 

Related Link: COVID-19 To Have 'No Permanent Negative Margin Impact' On US Airlines: JPMorgan

Baker was on CNBC's "The Exchange" Friday saying that he can "comfortably rule out" the potential that the COVID-19 pandemic aftermath will present any long-term structural impairment to the industry, though it has the potential to escalate margins and prove to be a positive for the industry. This was one of the driving factors behind the rating changes on JetBlue and Spirit, he explained. 

The analyst raised his price target for JetBlue from $15 to $25 and his price target for Spirit Airlines from $31 to $54.

Related Link: Benzinga's Top Ratings Upgrades, Downgrades For April 14, 2021

Analyst Thesis: The resilience of demand recovery among consumers will ultimately lead to a "corporate reopening trade," Baker told CNBC. The two airlines are not dependent on international borders reopening, he said. Chase credit card spending on leisure travel is also very encouraging, he added. 

The domestic reopening trade has "come close to running its course," but the next is going to be corporate and international reopening trade. Baker thinks Delta Air Lines, Inc. DAL is well-positioned to take advantage of the "next reopening legs that are yet to begin."

Price Action: JetBlue was down 1.88% to $20.30 at market close Friday.

Spirit Airlines was down 0.86% to $36.85 at market close Friday.

(Photo by Nel Botha from Pixabay.)