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Pro Analysis

Buy airline stocks as more fare classes like 'basic economy' coming, JPMorgan says

Airplane lifting off
Greg Bajor | Getty Images

JPMorgan raised its price targets on American Airlines, Delta and United Continental, predicting the creation of new fare classes across the industry in the coming year.

"Apart from bag fees, we consider Basic Economy to be one of the industry's most creative revenue concepts of the past decade," analyst Jamie Baker wrote in a note to clients Monday.

"As labor costs normalize and revenue initiatives accelerate in 2017, the likelihood that 2018 margins strengthen is high, in our view."