Citi's Stephen Trent on the state of the airlines sector, travel demand and M&A outlook

Airline Industry Outlook - The airline industry anticipates a busy Fourth of July holiday weekend, expecting 185 million travelers from the past Tuesday through the coming Sunday [1] - Economic uncertainty and potential tariffs are creating pressure on ticket prices, particularly affecting discretionary travelers in the domestic mainline sector [2] - Airlines have proactively cut capacity to manage a potential slowdown, which is expected to help the industry's performance [3] - Network airlines are well-positioned for a revenue bounce in the second half of the year, following capacity adjustments [4] Operational Efficiency and Infrastructure - Newark Airport has improved its operations, increasing departures to 34 per hour after previously dropping to 28 [4] - Weather conditions, such as thunderstorms, remain an unpredictable factor affecting airport operations [5] Loyalty Programs - Airline loyalty programs continue to generate growing revenue for both airlines and financial partners [6][7] - Despite some depreciation in point value, loyalty programs remain attractive due to continued card usage for various purchases [7] Mergers and Alliances - Outright mergers among the big four airlines are unlikely to be approved by regulators due to market share concerns [10] - Alliances are more likely to be considered favorably under the current administration [10][11]