Regarding the third takeaway about SWA, are we sure that “customers want them to make” all those changes? And once these service adjustments are introduced, will the airline just look like the Big Three?
It sounds like the oft-cited “our customers tell us,” justifying product changes, and not just in the airline industry. Bob Distler From: David Wardell via Mifnet <[email protected]> Sent: Sunday, 14 December, 2025 21:23 To: [email protected] Cc: David Wardell <[email protected]> Subject: [Mifnet 🛰 74936] Heard in the Hangar #317 Why we are raising our Planet Labs price target to $40 which may be conservative; why Southwest Airlines is one of our favorite stocks. Elon Musk’s SpaceX could be on the verge of a historic financial milestone – an initial public offering that could value the firm at a staggering $800 billion in the second half of 2026 –one of the largest IPO’s in history. The proposed IPO is expected to include Starlink, SpaceX’s satellite-internet subsidiary with millions of subscribers worldwide. SpaceX has not publicly confirmed the IPO and details such as the final valuation, timing, and structure could shift based on market conditions and regulatory factors. If the IPO proceeds as planned, it would give public investors unprecedented access to the future of space and satellite technology but going public could constrain some of the high-risk, long-term projects that have fueled SpaceX’s private growth, from next-generation rockets to ambitious plans for deep-space exploration. Our favorite Space Race 3.0 ideas, Rocket Lab Corporation and Planet Labs PBC stocks skyrocketed last week on the SpaceX IPO news, Rocket Lab Corporation’s announcement that Neutron launch vehicle’s “Hungry Hippo” captive fairing successfully completed qualification testing and is enroute to Virginia for Neutron’s first launch, and Planet Lab PBC reporting significantly better-than-expected third quarter 2026 revenue, EBITDA and free cash flow and raising full year revenue and profitability guidance. Our favorite Space Race 3.0 ideas in order are: 1. Planet Labs PBC 2. Rocket Lab Corporation 3. L3Harris Technologies 4. Northrop Grumman Corporation Trading at $18.24, we are increasing our price target for Planet Labs to $40 from $31, driven by stronger near-term results and substantially higher free cash flows - a price target that could prove conservative in view of potential new contracts and further margin expansion. Planet Labs announced the acquisition of Bedrock Research, an AI-enabled solutions company to accelerate its flight path in support of this demand. Also, Planet Labs announced that it successfully launched another 2 Pelican satellites as well as 36 Super Doves and announced an R&D initiative with Google to explore scaled AI computing in space since the end to the third quarter. The main risks are execution and renewal of key contracts. Trading at $61.49, we are maintaining our price target of $100 for Rocket Lab but recognize that its market value of $32.8 billion is a fraction of SpaceX’s current $400 and potential $800 billion if its IPO is successful. The main risks are execution and delays in Neutron launch. Meanwhile, back on Earth…our favorite global airline ideas in order are: 1. Delta Air Lines 2. United Airlines Holdings 3. Southwest Airlines 4. Alaska Air Group 5. Ryanair Holdings plc. 6. Volaris 7. Sun Country Airlines 8. American Airlines Group 9. JetBlue Airways FTAI Aviation is our favorite idea in Aviation Services. Joby Aviation is our favorite eVTOL idea, and Archer Aviation is a longer-term idea. We had the pleasure of attending the Wings Club luncheon in New York City on December 11, 2025 where Southwest Airlines CEO Bob Jordan was the featured speaker. Here are our key takeaways: 1. The U.S. economy is stable to strong, reflecting a cautiously optimistic outlook. 2. Thanksgiving was affected by the government shutdown, but as soon as it ended bookings rebounded sharply. 3. 2026 will be an inflection point for Southwest with the biggest makeover since Herb Kelleher stepped down as CEO, including assigned seats, premium service, bag fees, and other changes its customer want them to make. Industry capacity growth will be constrained in 2026, with Spirit Airlines bankruptcy a wild card. 4. Southwest Airlines wants to become a global carrier longer-term but that will require a different fleet, different services, premium class, and more complexity, so the management is taking a deliberate approach to get it right. 5. Southwest is not permitted to do domestic code sharing under its labor contracts with airlines like JetBlue which would be a way to speed up international growth. 6. The company did not answer whether M&A is a way to grow internationally, similar to the Alaska Airlines/Hawaiian Airlines merger. 7. The company has unencumbered assets of $40 billion, with a loyalty program that is a major component, but for now they do not plan to make the loyalty program more transparent to investors, as United Airlines has indicated it plans to do. 8. The Elliott Management activist membership on the board of directors pushed the company to carry out plans that were already in place. 9. Airport lounges are an important part of current customer expectations and they are looking at upgrading some and have a new lease in Honolulu. 10. The Trump Administration is focused on upgrading the Air Traffic Control system. Trading at $41.17, a target price of $72 in three years is not unreasonable based on 12x EPS of $6.00 in 2028. The main risks are execution, Boeing delays, recession, and higher jet fuel prices. Also in the this issue of Heard in the Hangar are our takeaways on PL, RKLB, Ukraine, LHX, NOC, Healthier Food and Fitness Options at Airports, LUV, ALK, JBLU, FTAI, JOBY, and ACHR.
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