Hot Picks: Airlines gain altitude as premium and corporate travel take off, analyst says

Airline stocks are benefiting from rising demand for premium and corporate travel, while carriers with strong international exposure are positioned to outperform.

BNN Bloomberg spoke with Tom Fitzgerald, analyst at TD Cowen, who highlighted United Airlines, Delta Air Lines and Copa Holdings as top picks, citing structural advantages, strong balance sheets and resilient revenue from higher-yield passengers.

Key Takeaways

• United Airlines’ upgrades to its fleet and network are driving market share gains and cost efficiencies.
• Corporate and premium travel are fuelling revenue growth across leading U.S. carriers.
• Delta’s diversified business and strong balance sheet support reinvestment and shareholder returns.
• Copa’s Panama City hub gives it a cost and efficiency advantage in Latin American routes.
• Airlines are seeing growing consumer demand for premium seats as travellers pay more for comfort.

Read the full transcript below:

ANDREW: On Hot Picks today, we’re focused on airlines. Our guest’s first selection is United Airlines. He says it has good exposure to premium and corporate travel, and those have been strong categories lately. We’re joined by Tom Fitzgerald, analyst at TD Cowen.

Tom, thanks very much indeed for joining us. Give us the bull case, as it were, on United Airlines.

TOM: Thanks, Andy. United’s been on about a 10-year turnaround plan since the current management team came in, and it’s fast becoming a stalwart on par with Delta Air Lines. As you noted, they’re a leader in corporate and premium travel and have the most exposure in the long-haul Atlantic and Pacific segments.

They’ve made significant improvements to their product, service and network schedules, which have driven material share gains in domestic markets like Chicago, Denver and Houston. They should also have a multi-year cost tailwind from their fleet investments, as the new aircraft have more seats per departure than those they’re replacing. So, we think there’s a lot of upside ahead on the earnings-per-share front, even without multiple expansion. We see significant upside from the current share price.

ANDREW: And you say business travel is a major strength for this company?

TOM: That’s correct, especially in the financial services and technology sectors, which tend to skew more toward the coasts, where United has hubs on either side.

ANDREW: Can you give us some perspective — did business travel come back post-COVID?

TOM: Volumes are still not at 2019 levels, but revenues have exceeded pre-COVID levels in part due to inflation. Importantly, every improvement in business travel is material for these airlines’ bottom lines, and we’ve seen a reacceleration in business activity since about the middle of the year.

ANDREW: Delta Air Lines — huge operation. What attracts you here?

TOM: They’re also a leader in corporate and premium travel. They have a very diverse revenue mix and aren’t heavily reliant on the main cabin, which gives them more resilience than a typical airline. They have the largest loyalty program in the industry, and they’ve built up a substantial third-party maintenance, repair and overhaul business.

Importantly, Delta has a really strong balance sheet. They’re on their way toward one times gross leverage by the end of the decade, which allows them to reinvest in the business, pay down debt and return capital to shareholders.

ANDREW: And your final idea is a carrier called Copa Holdings, CPA on the New York Stock Exchange. Can you tell us where they operate?

TOM: Sure. They’re based out of Panama City and are probably best characterized as a super connector, linking passengers north and south throughout the Americas. They have a cost structure similar to a low-cost carrier but a revenue structure more typical of a premium airline, which gives them strong margins.

They’ve been recording operating margins above 20 per cent since the pandemic ended. They have an investor day in New York in early December, where management is likely to outline the company’s path for the rest of the decade, and we think there’s upside ahead. We believe they’ll be able to maintain margins at these industry-leading levels.

ANDREW: Apparently, it’s the flag carrier for Panama, but its owner — Copa Holdings — also owns a Colombian airline?

TOM: Yes, they own a small Colombian operation called Wingo, but it’s only a handful of planes. Copa’s core business is connecting travellers between North and South America.

Panama City is the ideal hub for that — better than competitors like Bogotá or Mexico City — because it’s a sea-level airport. That means you don’t face penalties for high temperatures or elevation, which allows for quicker turnarounds and a more stable operation.

ANDREW: That’s interesting, because it’s hard to fly out of hot destinations. What’s the technical problem with heat for aircraft?

TOM: You face a penalty on weight, so you can’t carry as much cargo in the belly of the plane. It diminishes the revenue potential of the flight.

ANDREW: Right. And I gather they fly to Toronto and Montreal, so they do operate here. Anything else in the airline industry catching your eye? Are we going to see a relentless move toward ultra-budget models with tighter seating?

TOM: I think we’ve mainly seen more of an upmarket trend. Delta and United have had a lot of success with premium cabin fares, and we’re seeing more carriers improve revenue segmentation — even low-cost ones like Southwest or JetBlue adding first-class seats.

ANDREW: Interesting. Are the public generally willing to pay more for comfort?

TOM: Yes, if they feel they’re getting a better experience. There’s definitely consumer demand there. The jury’s still out on whether ultra-low-cost carriers with stripped-down seating can sustain demand, but at the higher end, especially on long-haul flights, people are willing to pay for comfort.

ANDREW: You spend a lot of time looking at airlines. Any travel tips for us as passengers?

TOM: If you absolutely need to be somewhere that day, I’d book the first flight out in the morning — that’s my best tip. Otherwise, pack patience in this environment.

ANDREW: I’ve heard that — it’s less likely to be delayed. Really appreciate it. Tom, thanks very much.

TOM: Thanks for having me.

ANDREW: Tom Fitzgerald of TD Cowen.

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This BNN Bloomberg summary and transcript of the Nov. 10, 2025 interview with Tom Fitzgerald are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.