Shares in British Airways owner International Consolidated Airlines Group SA (LSE:IAG) and Ryanair Holdings PLC (LSE:RYA) were in focus on Tuesday after Citi offered a bullish take on Europe’s biggest airlines, saying strong summer demand is keeping recession fears firmly on the tarmac.
The bank’s analysts said they had taken a group of investors on a tour of airline management teams across Europe last week, including meetings with IAG, Ryanair, Lufthansa and Wizz Air.
Their main takeaway? Holidaymakers still have an appetite to fly. “European travel demand remains strong and so far unaffected by recession fears in the US,” Citi said in a note to clients.
Transatlantic routes - especially those catering to business class and premium leisure travellers - are performing well, while bookings within Europe are also coming in strong for the summer season.
Citi singled out Ryanair and IAG for praise, reaffirming its 'buy' ratings on both stocks. It said upbeat commentary on bookings and pricing backs its positive view on the carriers.
The analysts added that operational improvements at Lufthansa are helping support its turnaround story, while travel demand from China - particularly into Europe - is becoming a more important driver for long-haul routes than the reopening of Russian airspace.
Citi said the tone from airline executives was “encouraging” and suggested that, for now, Europe’s carriers are flying with the wind behind them.
In late morning trading, IAG shares were up 1.9%, while Ryanair's were flat.