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Sep 9 2019, 06:30 IST/BST
Ratings and price correct at time of issue
|Company||Rating||Date||Previous Rating||Date||Closing Price|
|Air France KLM||OUTPERFORM||21/01/19||Neutral||22/01/18||985c|
|Wizz Air Holdings||OUTPERFORM||20/06/18||Neutral||21/06/16||3567.0p|
It may not feel like it, but the structural underpinnings of the European airline sector continue to improve. Those that deliver, i.e. the five leading airlines, now control over 60% of intra-European capacity and almost 90% of profits. The ‘rest’, except for Wizz, are characterised by a long tail and are struggling. We think industry consolidation is likely to continue and argue that even easyJet could be a target over the medium term. Meanwhile, valuations have collapsed, with Ryanair trading near the bottom of its range against fleet value and IAG <4x P/E. Both are structural winners.