Liberum Capital has upgraded its stance for discount airline easyJet PLC (LON:EZJ) to ‘hold’ from ‘sell’ as it thinks “supportive short-term trading outweighs cost concerns, for now”.
The City broker also raised its target price for the FTSE 100-listed firm to 1,800p from 1,250p, with the stock having closed trading on Monday at 1,778.5p.
READ: easyJet shares fall as UBS cuts rating to 'neutral' from 'buy'
In a note to clients, Liberum’s analysts said: “We remain concerned about easyJet’s unit cost trends. There is still structural upward pressure on non-fuel costs.”
However, they added: “Management seems to be switching focus from cost mitigation to better revenue per seat.
“The 2019 unit cost target has been shelved. In the short term, a supportive trading environment, with competitors cutting capacity on easyJet's routes, is supportive for earnings, margins and the rating.”
Ryanair May traffic rises
The upgrade for easyjet came as its Irish rival Ryanair PLC (LON:RYA) today released figures showing traffic grew by 6% in May to 12.5mln customers, with its load factor – how full its planes are – rising by 1% to 96%.
The dual Dublin and London-listed firm said its rolling annual traffic to May grew by 8% to 132.1mln customers
The group also noted that air traffic control (ATC) strikes and staff shortages caused the cancellation of over 1,100 flights in May 2018 versus 43 cancellations in May 2017.
Ryanair’s Kenny Jacobs said: “Regrettably over 200,000 Ryanair customers had their flights cancelled in May because of ATC strikes (mostly French), ATC staff shortages and thunderstorms.”
He added; “Ryanair calls for immediate EU Commission action to prevent more ATC strikes and staff shortages disrupting the travel plans of Europe’s consumers this summer.”