Report by CHA-AM Advisors

In the latest edition of David Scott’s A Strategist’s Diary, he argues that the jet-fuel panic has become an “ex-crisis”, with investors too quick to extrapolate higher fuel prices into a broader inflation problem. Instead, he sees demand destruction, airline fare discounting and rising supply from the US and China as evidence that the shock is already mean reverting. The investment implication is contrarian: sectors he would normally avoid, including airlines and state-owned Chinese oil/refining names, now offer compelling valuations. David highlights PetroChina and CNOOC as surprisingly well-run and still cheap despite strong prior returns, while also finding opportunities across global airlines including Spring Airlines, Delta, Ryanair, Eva Airways, IAG and IndiGo.

Industrials

Report by Asterisk Advisors

Reno Bianchi offers incisive commentary on key developments across the aviation sector. Highlights from his report this week include Delta’s strategic push towards AI-driven pricing, persistent capacity constraints from Pratt & Whitney engine issues and the latest fallout from the EU-US aerospace tariff standoff. In credit, short-dated EETCs like UAL B 4.6% due 2026 imply spreads near 1,000bps and offer compelling value if sourced at quoted levels. For AA tranches, Reno recommends 5yr paper with spreads ≥130bps; for A tranches, selected issues offering +200bps or more. He continues to favour Spirit’s 2015-1 B tranche. Term loans and senior secureds remain expensive, with Spirit and JetBlue as notable but risky exceptions. Domestic unsecureds are best avoided on tight spreads. LATAM remains his his preferred international credit, citing low leverage and relative upside.

Industrials

Report by Cmind

Cmind expects LUV is very likely to miss its Q2 earnings, scheduled for release on 27th July - their latest prediction shows that the probability of beating the consensus is 0.25. Comparing LUV against its peers (Delta Air lines, United Airlines and American Airlines) they find that the ratio Cash/Operating Profit of LUV exceeds 75 percentile and Receivables - Estimated Doubtful is below 25 percentile of the same metrics of its peers. In addition, linguistic signals indicate excessive CEO evasiveness, and CFO and analysts bullishness from earnings transcripts. Finally, LUV has missed its targets in the past two quarters.