Contents
Demand trends 3
IATA forecasts net loss of $4.7bn in 2009 3
Economic trends 6
Supply trends 8
Capacity will need to be cut 8
Share price and capacity behaviour 9
Capacity analysis in Europe's top airports 11
Earnings forecasts 13
Hedging positions 15
Liquidity trends – networks in need of market recovery 17
Current financial positions 17
Valuation 21
Individual stock comments 23
Lufthansa – conflicting loyalties; underweight relative to sector 23
Aer Lingus – decision on capital expenditure programme vital; neutral
relative to sector 25
Ryanair – unit costs outperformer; still the best in industry; overweight
relative to sector 27
easyJet – should structurally benefit from trading down; overweight
relative to sector 30
British Airways – structurally challenged unless we return soon to global
growth; underweight relative to sector 32
Air France-KLM – three years of operating losses but plenty of liquidity;
underweight relative to sector 34
Iberia – volatility would increase in a BA merger; underweight relative
to sector 36
Appendix 37
Technicals 37
IATA forecasts 40
Europe's top 100 city pairs 41
Top 100 airports – summer traffic trends 43
Share price performance/valuation 45
Financial models 47
Contacts 54
Important disclosures 55