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Wall Street is finding an unexpected beneficiary of America’s weight loss boom: airlines.
Analysts at Jefferies say the first GLP-1 weight loss drug, now available in pill form, could boost airline profits by quietly lowering fuel costs, the single biggest cost for airlines, if widely adopted throughout society.
“A leaner society = less fuel consumption. Airlines have a history of paying attention to making aircraft lighter, from olives (pitless, of course) to paper raw materials,” the Wall Street firm said in a note to clients.
Jefferies argued that a 10% reduction in average passenger weight could reduce the total aircraft weight by about 2%, reduce fuel costs by up to 1.5% and increase earnings per share by up to 4%.
Patients are already getting a product similar to Novo Nordisk’s first GLP-1 tablet for the treatment of obesity. Eli Lilly is not far behind, with US approval expected within months. By eliminating the need for self-injection, the pill is widely expected to attract first-time patients to obesity treatment.
increase in revenue
Jeffries estimates the impact could be significant for the nation’s largest airline. american airlines, delta airlines, united airlines and southwest airlines.
Together, the four carriers are expected to burn about 16 billion gallons of fuel in 2026, with an average fuel price of $2.41 per gallon, according to Jefferies. This brings total fuel costs to approximately $39 billion, or approximately 19% of total operating expenses.
Assuming that a 1% reduction in aircraft weight improves fuel efficiency by 0.75%, the investment bank estimates that a 2% reduction in average passenger weight could lead to around 4% upside in group-wide earnings per share. This represents a potential EPS increase of approximately 2.8% for Delta, 3.5% for United, 4.2% for Southwest, and as much as 11.7% for American Airlines, which has high operating leverage relative to fuel costs.
Weight is one of the most important factors in determining fuel efficiency, and the following aircraft manufacturers are key. boeing Emphasize it on a daily basis. When Boeing delivers an aircraft, it has a fixed “operational empty weight,” and the remaining allowance up to maximum takeoff weight is divided between fuel, passengers, baggage and cargo, Jeffries noted.
Jefferies used the 737 Max 8 as an example. The aircraft has an operating air mass of approximately 99,000 lbs., fuel capacity of approximately 46,000 lbs., and payload capacity of approximately 36,000 lbs. Assuming a two-class configuration with 178 passengers and an average weight of 180 pounds, the passenger weight would be approximately 32,000 pounds.
Jeffries said a 10% reduction in average passenger weight would reduce total passenger weight by about 3,200 pounds, or about 2% of maximum takeoff weight, resulting in significant fuel savings for thousands of flights per year.
The industry’s obsession with weight is well documented. In 2018, United Airlines switched its Hemisphere magazine to lighter paper, trimming about an ounce per copy. Jeffries pointed out that this would save 170,000 gallons of fuel annually, or the equivalent of about $290,000 at the time.
—CNBC’s Michael Bloom contributed reporting.
