Jet fuel has fallen around 15 percent since early July, which has offset potential headwinds for airlines including lukewarm passenger revenue per available seat mile (PRASM), a recent Morgan Stanley report says.
Rajeev Lalwani, an analyst with the wealth management firm, notes that “risk-reward is skewed to the upside, and we remain positive on airlines fundamentally.” His reasons for the positive outlook include the “balancing of supply-demand over time, substantial capital returns, and attractive valuation multiples.”
Commenting on fuel prices, Frank Holmes notes that Brent crude oil’s dip below $50 has been a “big win for airlines.”
Article summary written by U.S. Global Investors.