Airline sector: what if AI was the real engine?

Airline stocks literally took to the skies at the end of last week. United Airlines closed up 9.3%, ahead of Delta Air Lines (+8%), American Airlines (+7.6%) and Southwest Airlines (+3.3%). Though less dynamic, the trend was also clearly positive for European carriers, including +4% for Air France and +2.5% for Lufthansa. UBS believes it can detect an "AI" effect behind this rise. Here's why.

Air travel is flying high: beyond solid fundamentals, the sector can count on the expansion of both the "passenger" (+4.2% international traffic in 2026) and "cargo" (+3.4%) markets, as well as promising growth prospects in Asia.

UBS analysts this morning point to another significant strength for the sector: access to considerable volumes of customer and operational data. The bank believes this data wealth puts the industry in a particularly favorable position to take advantage of AI.

"Artificial intelligence can be deployed across the entire value chain: dynamic pricing, revenue management, predictive maintenance, operations optimization, customer relations and loyalty programs," the note essentially says.

In this respect, legacy carriers are ideally positioned to seize these opportunities, thanks to their size, financial resources and capacity to invest in technology, while smaller players could find it harder to keep pace.

The report nonetheless notes that the sector remains structurally volatile, exposed to economic cycles, fuel prices and geopolitical risks. Over the long term, airline stocks have historically underperformed global equity markets, UBS recalls, though it believes AI could partly change the equation.

In this context, the analysts say they are particularly backing Lufthansa, with a buy recommendation and a 12-month price target of €9.21.