easyJet PLC (LSE:EZJ)t has been downgraded to 'sell' from 'hold' by Deutsche Bank, with the broker cautioning that the airline is heading into another year of relative underperformance amid stubbornly competitive short-haul markets.
Deutsche Bank said intra-European seat capacity grew by just over 4% last summer, broadly in line with its expectations, and while growth is forecast to slow modestly in 2026, it will remain sufficient to cap pricing power.
Demand growth, meanwhile, has reverted to a more typical relationship with economic growth, forcing airlines to rely on price stimulation in real terms to fill seats. The result, according to the broker, has been flat short-haul fare growth in nominal terms.
Looking ahead, Deutsche expects little change in that dynamic. Capacity is forecast to rise again next summer, while demand growth could soften as economic momentum slows.
The bank’s economists are forecasting UK gross domestic product growth of 1.1% in 2026, down from 1.4% this year, reducing support for discretionary travel.
In this environment, Deutsche argues that short-haul flying increasingly favours airlines with the lowest cost bases.
It said carriers such as Ryanair are better positioned to withstand fare pressure, leaving easyJet exposed to weaker relative performance despite solid operational execution and disciplined capacity growth.
The shares were flat at 480.36p.