UBS prefers Ryanair to easyJet; 28% decline in Brazil domestic airfares in 2009
easyJet was downgraded by UBS from “buy” to “neutral”, with UBS commenting, "while we still like the business model and see upside to forecasts, we think the shares will take a breather."
UBS added that its favourite carrier in the European LCC sector is now Ryanair, stating, "over the last 12 months, easyJet has outperformed Ryanair by over 25%. Furthermore, since the beginning of 2010, easyJet has outperformed Ryanair by over 10%. We think this is now over done and see more share price upside from Ryanair than easyJet."
Shares in easyJet slipped 0.5% on Friday, while Ryanair gained slightly (by 0.2%).
easyJet happy with FY2010 profit target: CEO
Separately, easyJet CEO, Andy Harrison, in an interview with Reuters, stated the carrier is “happy” with analyst forecasts for a pretax profit of GBP170 million in the full-year, after making a strong start to 2010.
Mr Harrison added, "yields will be up in the first-half and 2010 has been good for us so far", but added, "airlines are likely to see subdued demand in 2010 and I don't see a macro economic recovery taking place in 2010". Ancillary revenues, meanwhile, continue to rise, with double-digit growth expected in the current year for the LCC.
28% decline in average air fares in Brazil
In Brazil, GOL’s shares slipped 2.0% on Friday, as investors sold off stocks in the nation’s airlines upon the release of data from ANAC which revealed a 27.5% decline in the average air fare in 2009, down some 30% from their high in 2002. Investors are now anticipating weaker earnings for GOL and TAM as a result, according to SLW Corretora.
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Selected LCCs daily share price movements (% change): 19-Feb-2010