Shares in International Consolidated Airlines Group SA (LSE:IAG) lost altitude after Barclays double downgraded its shares to 'underweight' from 'overweight'.
The bank warned that the "golden goose" of transatlantic travel may be "cooked, cutting its price target for the stock to 250p from 420p.
IAG, which owns British Airways and Iberia, relies heavily on North Atlantic routes for profitability.
Barclays estimates that more than half of its earnings come from these flights.
While airlines have been optimistic about summer bookings, Barclays fears the weakness seen in the U.S. domestic market will spread to international travel.
US carriers, such as Delta and American Airlines, have recently issued profit warnings, citing weaker demand.
While they claim the slowdown is limited to domestic travel, analysts argue that consumer confidence is fragile and that international bookings could take a hit in the coming months.
The report also points to broader economic and geopolitical risks. A slowing U.S. economy, volatile financial markets, and potential trade tensions with Europe could dampen demand for transatlantic flights.
Wealthier travellers, who drive premium leisure demand, may not be immune to these pressures.
Barclays is also concerned about competition from low-cost carriers. It suggests that budget airlines like Ryanair and easyJet are better positioned, as short-haul travel is less exposed to the risks affecting long-haul demand.
Despite IAG’s strong cash generation, Barclays believes airline stocks are driven by momentum. With earnings estimates likely to fall, it expects IAG’s share price to struggle in the near term.
In afternoon trading, the stock was down 3% at 282.35p.