Bernstein has released its preferred picks for the European airline group as companies prepare to report quarterly results, emphasizing carriers it believes are best positioned to produce robust financial outcomes in the current market environment.
The investment house highlights improved revenue metrics and operational execution among leading carriers, singling out two names in particular.
IAG: Top-ranked pick
Bernstein ranks IAG as its top selection in the region, noting the holding company’s ability to generate strong earnings and cash flow for investors. In the firm’s assessment, IAG produced a notable improvement in revenue per available seat kilometer (RASK) in the first quarter, with RASK up 3.5% year-over-year.
The analyst team says momentum from that performance is likely to carry into the current quarter. Bernstein positions itself 7% ahead of consensus on EBIT estimates for the quarter, citing particularly strong showings in specific markets including Spain and on North Atlantic routes.
Bernstein also describes the near-term backdrop as favorable for IAG, pointing to the fading threat of elevated fuel costs and to negative capacity growth on the vital UK-North America market - a dynamic the firm sees as supportive of pricing power.
Ryanair: Resilience and balance-sheet strength
The firm also highlights Ryanair, noting it has been among the least affected by the fuel crisis across European carriers. Bernstein emphasizes Ryanair’s comparatively strong balance sheet and its high level of fuel hedges relative to peers.
Although company management struck a more cautious tone on yields at its fiscal year results, Bernstein observes that this caution appears to be moderating as customers return to booking travel. The firm states it is 4% ahead of consensus net income estimates for the quarter and views Ryanair as well positioned for both near- and medium-term performance.
Bernstein’s rankings arrive as the sector demonstrates signs of resilience, with the firm pointing to revenue gains, operational execution and market-specific dynamics as the primary factors shaping its outlook for these carriers.
Key takeaways, risks and sector impact are summarized below.