Barclays sours on European airlines on fuel price worries, cuts Ryanair, Norwegian
BUZZ-Barclays sours on European airlines on fuel price worries, cuts Ryanair, Norwegian ** Barclays calls for caution on European airlines, citing high fuel prices and airlines' lack of ability to raise prices, prompting it to lower PTs across the sector
** The broker says low-cost carriers hold a consumer base that is more impacted by rising cost of living, and fuel is a higher share of the total cost for said firms
** As a result, it cuts Ryanair RYA.I and Norwegian Air Shuttle NAS.OL to "equal-weight" from "overweight"
** Ryanair's fuel hedging are seen dropping from 80% in March 2027 to 15% in April 2027, weighing on the broker's estimates for FY28
** Barclays sees Norwegian's EBIT in Q3 lower by 20% due to the high fuel costs, coupled with the lowest level of hedging among airlines in its coverage
** British Airways owner IAG ICAG.L emerges as the broker's top pick for the current environment, as fuel is a smaller share of its total costs
COMPANY | RATING | OLD RATING | PT | OLD PT |
Aegean Airlines | Overweight | / | €14.50 | €16.00 |
Air France-KLM | Underweight | / | €9.00 | €11.00 |
Deutsche Lufthansa | Underweight | / | €6.50 | €7.50 |
Finnair | Underweight | / | €3.20 | €3.60 |
IAG | Overweight | / | 525p | 575p |
Jet 2 | Overweight | / | 1750p | 1950p |
Norwegian Air Shuttle | Equal weight | Overweight | NOK 11.50 | NOK 20.0 |
Ryanair | Equal weight | Overweight | €24.00 | €28.5 |
Tui | Overweight | / | €8.75 | / |
Wizz Air | Overweight | / | 1200p | 1250p |
(Reporting by Alexander Klyve Gudbrandsen)
((alexanderklyve.gudbrandsen@thomsonreuters.com))