Davy Research

Airlines & Other Transport

An inflection point for yields
Airlines & Other Transport

DAVY VIEW

We are now more constructive on industry fundamentals for the first time in four years. Capacity growth trends in short-haul and key long-haul markets are improving. There are also signs that the unit revenue backdrop is getting better, which we find interesting as yield assumptions across the sector are now very conservative. These underpin our ‘Outperform’ ratings on IAG and Lufthansa. Separately, our detailed overlap analysis of the European short-haul market supports our structural long view on Ryanair. We think that easyJet now has big decisions to make – is it a dividend yield or growth stock? We cut our rating to ‘Underperform’.

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Airlines & Other Transport

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