Morgan Stanley recently released a research report on the North American aviation industry, summarizing key industry developments from the past week, including potential M&A deals, government long-term strategies, frequent flyer program adjustments, and executive changes. The report also provided detailed capacity data, consumer surveys, and analyses of individual stock investment ratings. Key news summaries include potential industry consolidation: Spirit Airlines, currently under bankruptcy protection, and Frontier Airlines (ULCC.US) are reportedly discussing a potential merger. Sources indicate a deal could be announced as early as this month, although neither company has publicly commented. The two companies have been in contact multiple times since at least 2022 but have failed to reach an agreement previously. National strategy release: The U.S. Department of Transportation (DOT) published the "2026-2036 National Strategy for Advanced Air Mobility," planning to accelerate the research, development, and deployment of Advanced Air Mobility (AAM) technologies by coordinating actions across federal, state, local, and tribal governments. The strategy focuses on four core areas: safety, security, defense, and economic competitiveness, setting phased development goals: complete demonstration operations at existing airport infrastructure by 2027, fostering a domestic U.S. supply chain for key technologies like automation and avionics; expand urban and rural AAM operations by 2030, promoting private investment in vertiport construction and modernization of low-altitude traffic control systems; achieve advanced capabilities such as fully autonomous flight by 2035, solidifying U.S. leadership in aviation manufacturing and global air trade. Loyalty program tightening: American Airlines (AAL.US) announced that, starting mid-December 2025, passengers purchasing Basic Economy tickets will no longer accumulate AAdvantage miles or elite qualifying points. This move increases the restrictiveness of its Basic Economy product, aligning with competitors like Delta Air Lines (DAL.US), which have already implemented similar policies. Senior executive changes: Delta Air Lines President Glen Hauenstein will retire on February 28, 2026. Having served at the company for over 20 years, he has significantly influenced its route network planning and commercial strategy. His successor will be current Senior Vice President Joe Esposito.

Market and consumer insights, based on OAG data, show differentiated adjustments in capacity plans by major North American airlines for the second quarter of 2026: American Airlines' short-haul international capacity increased 7.6% year-over-year; United Airlines' (UAL.US) domestic capacity grew 9.0%, while its short-haul international capacity rose 1.6% year-over-year; JetBlue Airways' (JBLU.US) short-haul international capacity increased 11.9% year-over-year, with long-haul international capacity surging 12.2%. Regarding consumer demand, an AlphaWise survey indicates 58% of consumers plan to travel in the next six months. Although this is slightly down from 62% a year ago, it is higher than the previous month's level. Corporate travel spending intention ranks highest among all travel demand categories, and the willingness to spend on international travel has surpassed that for domestic travel for the first time. Income stratification is evident: travel intention among consumers with a household income over $150,000 reaches 79%, while intentions among the $25,000-$49,000 and $100,000+ income groups have also risen significantly, indicating resilient travel demand across income brackets.

Morgan Stanley maintains an "Attractive" view on the North American aviation industry. The report updated stock ratings, target prices, and risk-reward analyses for nine major covered airlines: Alaska Air Group (ALK.US), American Airlines, Delta Air Lines, United Airlines, Southwest Airlines (LUV.US), and Sun Country Airlines (SNCY.US) received "Overweight" ratings, while Allegiant Travel (ALGT.US), Frontier Airlines, and JetBlue Airways were given "Equal-Weight" ratings. The report highlights Delta Air Lines as a favored pick due to its robust balance sheet and leading customer loyalty program; United Airlines stands out for its execution capabilities; and a key focus for Southwest Airlines in 2026 will be the successful rollout of its new assigned seating system.