Adjusting network models for earnings/fuel

  • Sectors : Airlines
  • Companies : easyJet | Air France KLM | Norwegian Air | Ryanair Holdings | Wizz Air Holdings | Lufthansa | IAG


Ratings and price correct at time of issue

Company Rating Date Previous Rating Date Closing Price
Air France KLM UNDERPERFORM 11/05/20 Neutral 20/01/20 379c
easyJet OUTPERFORM 24/01/22 Neutral 14/07/21 508p
IAG NEUTRAL 12/08/20 Outperform 31/08/18 138.7p
Lufthansa OUTPERFORM 24/01/22 Underperform 08/06/20 706c
Norwegian Air NEUTRAL 01/09/15 Underperform 22/01/15 1043nok
Ryanair Holdings OUTPERFORM 07/12/09 Neutral 02/11/09 1377c
Wizz Air Holdings UNDERPERFORM 21/04/21 Neutral 09/09/19 3011.0p


Airlines stocks have been on a wild ride since the Ukraine invasion, as has the oil price. Post-earnings season we have adjusted fuel upwards from $775 to $975 per metric tonne for the network airlines. Clearly there are a range of issues – overflight re-routing to Asia, elongated supply chains in cargo, demand/supply in the two main markets this year (Intra-Europe, Atlantic). US markets have taken a sanguine enough view of the conflict compared with Gulf War times, but European airlines are down anywhere from single digits to 35% in the case of Wizz. In fairness, all the major networks have restructured post-COVID. We favour Lufthansa (‘Outperform’) over the others given cargo exposure, optionality on Lufthansa Technik, the declining pension deficit and balance sheet strength.

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Mar 11 2022, 13:00 GMT