US airlines are likely to report a strong Q4 with earnings either exceeding or coming in at the upper end of their guidance, UBS said in an earnings preview emailed Tuesday.

Demand remained "resilient" in the final weeks of 2024, resulting in a bullish outlook, UBS said. Q4 revenue growth accelerated about 400 basis points year over year on average when compared to Q3, the firm added, citing Bloomberg data.

With Q4 results out of the way, investors will be on the lookout for forward outlooks on key metrics, particularly revenue per available seat mile, or RASM, according to the note.

"In an environment with continuing cost inflation for airlines, we believe accelerating RASM growth is important for airlines to expand margins in 2025," UBS wrote.

UBS said it estimates around 4% RASM on average for Q1, excluding Alaska Air Group (ALK), above the consensus of 2.5% to 3%.

"Those that report RASM upside to consensus are likely to be rewarded this reporting season as it will provide greater confidence on the achievability of 2025 estimates," UBS said.

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