Investors have grown more positive on European airlines over the past week, according to Citi, though overall positioning across the sector remains net negative.
Long crowding, a measure of how heavily investors are clustered on the same bullish trade, increased across every stock the bank covers.
International Consolidated Airlines Group SA (LSE:IAG), the owner of British Airways and Iberia, saw the largest increase after an abnormal turn negative the week before.
Positioning remains most positive in IAG and Ryanair Holdings PLC (LSE:RYA), the Irish low-cost carrier, which recorded the biggest fall in short positioning over the week.
Air France-KLM (OTC:AFLYY) has moved out of the consensus short category and into what Citi calls the two-way debate quadrant, potentially following recent strong results.
Lufthansa remains a consensus short despite some increase in long positioning.
The German carrier and Wizz Air Holdings PLC (AIM:WIZZ), where positioning has barely moved, are the two names investors are most heavily betting against.
The shift in sentiment comes as UBS reported a further contraction in seat capacity between Europe and the Middle East.
August schedules from the region showed a decline of 6.0% against the previous week's reading of 5.5%.
September schedules weakened more sharply, falling 4.5% compared with 2.7% a week earlier.
Fourth-quarter indications point to broadly flat capacity to and from Europe, though December shows some moderation.
Analysts led by Jarrod Castle said geopolitics continues to shape how airlines deploy capacity as demand adjusts, a dynamic that can cut both ways for the industry.
Elsewhere, the picture is steadier, with European capacity growth holding up into the final quarter of the year.
Third-quarter long-haul capacity growth was 2.6%, down marginally from 2.7%, while short-haul was unchanged at 4.2%.
Fourth-quarter growth is expected at 4.9% for long-haul, slightly ahead of the previous estimate of 4.8%.
Short-haul growth for the same period was trimmed to 3.2% from 3.4%.