FRANKFURT (dpa-AFX) - A sector outlook for 2026 from JPMorgan left its mark on European airline stocks on Monday morning. The most pronounced reaction came from Air France-KLM, whose shares extended their recent rally by more than 9 percent at times, reaching EUR11.515. Analyst Harry Gowers abandoned his previous caution, now rating the shares "Overweight" with a price target of EUR14. This suggests he sees them nearly returning to their record high from August.
For Air France-KLM--as well as for Lufthansa--Gowers forecasts improved conditions in the long-haul sector and sees margin potential. Lufthansa shares subsequently climbed to EUR8.39, setting a new two-year high. Gowers now rates the stock "Neutral," upgrading it from his previous "Underweight" stance.
Gowers has turned negative on EasyJet, whose shares declined accordingly. He anticipates an oversupply on intra-European short-haul routes and has therefore downgraded both EasyJet and Jet2. While he remains positive on Ryanair due to its strong cash flows, he also sees little immediate upside. Jet2 shares fell, while Ryanair edged slightly higher.
Gowers's top pick in the sector is airline holding company IAG. However, after its recent recovery, IAG shares pulled back at a technical resistance level.
Meanwhile, UBS analyst Jarrod Castle praised EasyJet for its relatively new package holiday business. Launched at the end of the last decade, this segment, once a loss-maker before the COVID-19 pandemic, has since turned around and is expected to contribute more than a third of the company's pre-tax profit in 2025. Castle anticipates that earnings in the holiday business will continue to outpace those in the airline segment.
