Shares in Ryanair Holdings PLC and easyJet PLC fell on Wednesday after rival Wizz Air Holdings PLC (AIM:WIZZ) was dealt a downgrade by Citigroup.
Kicking Wizz from its ‘neutral’ to ‘sell’ lists, Citi pointed to future reductions in the airline’s capacity from investigations into potential issues with Pratt & Whitney engines.
Wider concerns with the short-haul sector were also cited despite Ryanair, easyJet and Wizz enjoying a more rapid post-pandemic recovery than those primarily committed to longer routes.
“We believe pricing will lose momentum in short-haul compared to long haul,” the bank said in a note.
Ryanair was indeed specifically tipped by Citi as likely to outperform against peers on pricing, given the Irish carrier has more flexibility, according to the bank.
However, the view that things may not be as rosy in the short-haul sector was echoed by Deutsche Bank analysts.
Pointing to the “uneasy” market, which resulted in easyJet shares falling despite a confident update last week, Deutsche hit the carrier with lower profit expectations.
Higher than anticipated fuel costs may not be offset by higher yields per seat, the German bank said, leading to lower-than-expected growth in pre-tax profits for easyJet over the coming years.
Shares in Wizz fell almost 5% to 1,615p on Wednesday.
Ryanair and easyJet were down 2.7% and 4% respectively, with Tui AG and Jet2 PLC (AIM:JET2) also taking a hit.