Although European airlines are "complaining vociferously" about capacity shortages, this is actually underpinning favourable revenue per passenger for airlines, says Barclays, with easyJet PLC (LSE:EZJ) one of the best positioned.
The capacity shortage is real, the bank acknowledged, with a shortage of aircraft capacity as Airbus and Boeing delivery programs recover slowly from the pandemic, while certification timings of key new aircraft are delayed, and others are hit by issues for Pratt & Whitney's GTF engine.
Barclays' current forecast for 2024 aircraft production is 11% below where it was expected to be two years ago and 23% below forecasts before the pandemic.
But as the lady doth, "Airlines protest too much", the Barclays analyst Andrew Lobbenberg said, with the vociferous moaning mostly to seek compensation from aircraft manufacturers.
However, he said airlines are also struggling to secure manpower to operate their current operations, though "it is not clear to us how they would be able to run larger operations, were the aircraft manufacturers able to supply the aircraft.
"Moreover, the shortage of supply is proving highly supportive to industry unit revenues, profitability and cash generation."
Among the European low-cost airlines, he sees easyJet as "particularly well placed", as it has the second-largest order book, an existing and future fleet that appear "relatively unaffected" by aircraft production problems, while aircraft challenges of rivals are leading to a reduction of competing capacity against easyJet.
Among the European flag carriers, AF-KLM's order book has the least exposure to aircraft types facing delays, the analyst said, with the Franco-Dutch airline also facing "the least (though still some) challenges" from the GTF engine.
The tight capacity supply market will also be "a catalyst for consolidation", Lobbenberg predicts, even though current deals such as Lufthansa seeking to acquire ITA and International Consolidated Airlines Group SA (LSE:IAG) seeking to acquire Air Europa both facing "tough" competition policy scrutiny.
"We foresee that European airlines will consider the acquisition of small and mid-sized airlines that are of a scale that do not create competition policy concerns, using acquired aircraft to asset strip the fleet and qualified crew to be deployed into the operations of the acquiring airline."