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Another prime example of read-across hurting the sector. This time it’s the airlines.
A downbeat outlook message from Ryanair on Q2 pricing, zero H2 visibility, higher fuel costs, the risk of more disruption (ATC and crew strikes) and, of course, Brexit is weighing on both it and peers.
Especially easyJet, even after it upgraded guidance in its own Q3 results last week, helping the sector rally. You could argue that EZJ is more immune to the crew disruption angle, given its better relations with unions.
However, it’s difficult to argue that the other issues CEO’Leary points to aren’t applicable to such a close peer. Hence why the sector as a whole is having a bad day.
That said, the sector was already in reverse by the weekend as the positive reaction to easyJet’s Q3 report results evaporated and mixed broker updates on the sector took their toll.
EZJ shares are down 9.2% from last week’s results-day highs, ever closer to 1545p lows/support since late Jan. Ryanair trades fresh 2018 lows, down 11.4% from last week’s peak, although it has yet to trouble the lows of December when it first said it would recognise unions to avoid further strikes. Wizz Air is down 4.1% from last week’s highs while IAG has fallen back by 3.7% to revisit July rising support.
A tough start to the week with Ryanair adding fuel to the fire of last week’s reversal. Not exactly a Summer of Love for the airlines.
Mike van Dulken, Head of Research, 23 Jul 2018
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Prepared by Michael van Dulken, Head of ResearchComments are closed.