European airlines see travel resisting consumer pressure for now | The mighty 790 KFGO


By Sarah Young and Klaus Lauer

LONDON (Reuters) – British Airways owner IAG, Europe’s biggest airline Ryanair and rival easyJet said travel demand was holding up, easing concerns that pressure on household budgets could stall travel. resumption of aviation after the pandemic.

Australia’s Qantas Airways Ltd also said on Thursday it saw consumers willing to pay higher fares despite rising inflation and interest rates.

IAG shares jumped as much as 10% after an unexpected announcement on Thursday to report better-than-expected earnings for its summer quarter and a confident outlook. Meanwhile, Ryanair said its bookings for the Northern Hemisphere mid-autumn and Christmas holidays are ahead of pre-COVID levels and it is seeing average fares rise more than expected until at the end of March.

In Europe, most airline stocks have plunged in the past six months, some as much as 50%, on fears that rising household bills will dampen appetite for travel.

But airlines injected optimism back into the market on Thursday.

IAG, which also owns airlines Aer Lingus, Iberia and Vueling, said forward bookings remain at expected levels for this time of year “with no indication of weakness”.


Johan Lundgren, chief executive of easyJet which previously issued guidance for its full-year results, was more cautious, saying there was “uncertainty there”, but the low-cost operator also said there was reason to be optimistic.

“Despite the challenges faced by households, we still know that vacations and travel are at the top of the list when people can prioritize what they want to do with their disposable income,” he told reporters. journalists.

For the UK school holidays in October and Christmas week, easyJet said ticket sales were above pre-pandemic levels and load factors – a measure of occupied seats – for winter bookings and prices were robust.

Analysts noted that the strength of the dollar against the pound and euro has recently made it cheaper for US visitors to come to Britain and Europe, a particular boost for IAG which has broad exposure. to the transatlantic market.

Ryanair chief executive Michael O’Leary said demand appeared to be supported by savings accumulated during the pandemic, but he cautioned about the length of this period, saying he expects customers’ disposable income will be impacted by increases in interest rates and the cost of living further into the northern hemisphere winter.

This was echoed by Hargreaves Lansdown equity analyst Sophie Lund-Yates, who said the upgrade from IAG was “a very good surprise, but whether the lively background music can to be maintained is a whole other matter”.

(Writing by Sarah Young; Editing by Emelia Sithole-Matarise)


Comments are closed.