From Frontier Airlines in the U.S. to Ryanair in Europe and AirAsia in Asia, you’ve probably flown a low-cost airline at least once on your travels. These airlines offer low-cost fares with no extras like seat selection, bags, or drinks included with your fare. After all, that’s their business model: Get you from A to B as cheaply as possible, and charge you for every extra.Sometimes referred to as “budget airlines,” low-cost airlines often operate routes that are underserved by major airlines. For example, ...

Core Viewpoint - The easyJet share price has been stagnant since the pandemic, with a significant decline of 18.4% this year, yet there remains potential for upside in the future [3]. Group 1: Market Dynamics - The recent weakness in easyJet's share price is largely due to competitor Jet2's announcement of later customer bookings for summer, raising concerns about cooling travel demand and reduced visibility for capacity and yields [4][5]. - Jet2 plans to cut its winter seat capacity by 3.4% to approximately 5.6 million seats, which has heightened fears among easyJet investors regarding potential impacts on profitability [5]. - Operational disruptions, including air traffic control strikes, are expected to negatively affect easyJet's FY25 pre-tax profit by £15 million, further complicating the operational landscape [6]. Group 2: Travel Trends - Despite some negative trends, there is evidence suggesting that travelers may be shifting their plans to shoulder seasons and winter, which could alleviate fears of declining travel demand [9]. - Data indicates that searches for autumn stays among young travelers have increased by over 25%, and one-third of travel agents report a rise in shoulder-season bookings [10]. Group 3: Financial Outlook - Forward sales for easyJet are reportedly up 1.0% for Q4'25 and Q1'26 compared to the previous year, indicating some resilience in demand [11]. - The macroeconomic outlook remains mixed, but consumer confidence has shown improvements, which could positively influence easyJet's performance in FY26 [14]. - The company's EPS CAGR projection has been revised down to 7.5% from 11.9% through FY27, reflecting a more cautious sentiment, while its EV/EBITDA remains undervalued at 1.3 compared to the sector's average of 2.4 [17].

Core Viewpoint - Southwest Airlines is facing significant challenges due to potential economic downturns, leading to a sharp decline in stock price and the withdrawal of crucial profitability guidance for 2025 and 2026 [1][6]. Company Performance - In the first quarter of 2024, Southwest Airlines reported a revenue increase of less than 2% year over year, totaling just over $6.4 billion, which was in line with analyst expectations [4]. - The company narrowed its bottom-line loss to $77 million, compared to a shortfall of $218 million in the first quarter of 2024. The non-GAAP net loss improved to $0.13 per share from $0.36, beating the consensus projection of $0.17 [5]. Industry Context - The airline industry is highly sensitive to economic conditions, particularly discretionary consumer spending, which tends to decline during recessions [2][4]. - A study by Bank of America Institute indicated a 2.5% year-over-year decrease in weekly consumer spending on lodging as of March 22, suggesting a waning post-pandemic travel demand [8]. - The potential for a recession could exacerbate the already challenging environment for the airline and tourism industries, making recovery difficult for companies like Southwest Airlines [9].