Morgan Stanley cuts estimates for European airlines on fuel uncertainty

Ryanair Holdings

02/04/2026 08:59

** Morgan Stanley lowers estimates for European airlines as the war in Iran shows no signs of de-escalation and the Strait of Hormuz remains closed

** "Risks around further pricing increases and capacity cuts could intensify if jet fuel supply constraints persist, weighing on consumer confidence as higher inflation and interest rates increasingly pressure discretionary spending", the broker notes

** Discussions with airlines suggest visibility on jet fuel availability is limited to the next 4-5 weeks, raising the risk of capacity adjustments and reduced Europe-Asia traffic should supply constraints persist, MS says

** The broker sees IAG and Ryanair as best positioned, underpinned by stronger balance sheets, more favourable fuel hedging and industry-leading cost bases

** It cuts 2026 EBITDA estimates for IAG ICAG.L, Lufthansa LHAG.DE, Air France-KLM AIRF.PA by 6%, 17%, and 10% respectively

** It also cuts full-year EBITDA estimates for low-cost carriers Ryanair RYA.I, Easyjet EZJ.L and Wizzair WIZZ.L of 10%, 18%, and 20%, respectively

** It downgrades Lufthansa to "equal-weight" from "overweight" as the co's fuel hedging remains less attractive versus peers and it sees shares' overperformance compared to peers as "unjustified"

 (Reporting by Emanuele Berro)

 ((emanuele.berro@thomsonreuters.com))