easyJet share price: Analysts weigh in on airline after Thomas Cook collapse

on Sep 24, 2019
Updated: Apr 28, 2020
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Analysts see ‘a more rational winter’ for easyJet (LON:EZJ) following the collapse of troubled tour operator Thomas Cook (LON:TPG). The comments came as the low-cost airline’s share price rallied in the previous session.

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easyJet’s share price has additionally extended the previous session’s advance this morning, having gained 1.63 percent to 1,124.50p as of 10:44 BST, and outperforming the FTSE 250 which has slipped into the red and currently stands 0.31 percent lower at 19,981.65 points. The airline’s shares have given up just under a fifth of their value over the past year, as compared with about a 2.4-percent fall in the mid-cap index.

More rational winter ahead

The Financial Times quoted analysts at RBC as commenting yesterday that while Thomas Cook’s collapse marked “distressing news for passengers and holidaymakers, longer-term an earlier shake-out likely leads to less risk of irrational fare pricing (cash flow raising rather than profit making) affecting this winter”. The broker reckons that for easyJet, “this does suggest a more rational winter is ahead, but beyond that, how [airport landing] slots and capacity is recycled back into the market will be key”.

“History here suggests that capacity will not disappear, but return in just a slightly more consolidated form,” the analysts concluded.

Earlier this month, news suggested that easyJet had  expressed an interest in collapsed airline Aigle Azur’s operations at Paris Orly airport.

Other analysts on easyJet

Liberum reaffirmed its ‘hold’ rating on the budget airline, without specifying a target on the easyJet share price. According to MarketBeat, the company currently has a consensus ‘hold’ rating and an average valuation of 1,172.95p.

easyJet is scheduled to issue a full-year pre-close trading statement on October 8. The low-cost carrier has said that it expects to deliver full-year headline profit before tax of between £400 million and £440 million.

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