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Jun 5 2020, 06:30 IST/BST
Airlines
A tale of two airlines
- Sectors : Airlines
- Companies : Lufthansa | easyJet | Air France KLM | IAG | Wizz Air Holdings | Ryanair Holdings | Norwegian Air
Ratings
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 | 550c |
| easyJet | NEUTRAL | 20/06/18 | Outperform | 12/12/17 | 877p |
| IAG | OUTPERFORM | 31/08/18 | Neutral | 22/08/17 | 313.5p |
| Lufthansa | UNDERPERFORM | 08/06/20 | Neutral | 30/10/18 | 1070c |
| Norwegian Air | NEUTRAL | 01/09/15 | Underperform | 22/01/15 | 417nok |
| Ryanair Holdings | OUTPERFORM | 07/12/09 | Neutral | 02/11/09 | 1266c |
| Wizz Air Holdings | NEUTRAL | 09/09/19 | Outperform | 20/06/18 | 3468.0p |
DAVY VIEW
With a focus on the corporate passenger (60% of Network Airlines’ revenues), we don’t expect full earnings recovery at Lufthansa until 2023 at best. The ongoing recapitalisation has eased shorter-term liquidity concerns but will limit free cashflow to equity for some time and deleveraging will take precedence. By contrast, Wizz is well-capitalised and likely to return to profitability before next summer. Its cost base and aircraft delivery schedule are also a potent combination in a time of competitor retrenchment. Its valuation, however, already reflects this and is perhaps reliant on a rapid return of demand – we retain a ‘Neutral’ recommendation.
