Soaring High for Airline Stocks?

Soaring High for Airline Stocks?

In the competitive skies of Europe, two major players, IAG and Ryanair, are soaring high thanks to their aggressive growth strategies, modern fleets, and record passenger traffic.

IAG, the parent company of British Airways and Iberia, has seen its first-half profits leap by 44% to €1.9 billion (£1.65 billion). This impressive growth is reflected in IAG's share price, which has surged by 23% since the start of the year [2]. The CEO of IAG, Luis Gallego, is optimistic about the future, predicting "good earnings growth, margin progression, and strong returns to shareholders this year" [7].

Ryanair, Europe's leading low-cost carrier, is also reaping the benefits of its expansion. The airline's share price soared by 74 per cent over the past year to €26 (£22.54) [4]. Michael O'Leary, Ryanair's boss, qualified for a €100million (£86.7million) bonus thanks to the much-improved share price [1]. Ryanair's passenger numbers reached a record 20.7 million in July, marking a 3% year-on-year increase [5]. Despite operational challenges like French air traffic control strikes [3], the airline has managed to maintain its growth momentum.

However, not all airlines are experiencing the same success. Jet2 and Wizz Air are reported to be facing serious headwinds. Jet2 shares have edged up by just 4% since January to 1632p, while Wizz Air shares are 5 per cent lower than at the start of this year [6]. Wizz Air's CEO, Jozsef Varadi, is abandoning expansion in the Middle East due to the region's dry air exacerbating engine issues [9]. Meanwhile, Wizz Air's profits dropped by 40 per cent due to persistent problems with the Pratt & Whitney engines [8].

EasyJet, another major player, has also seen growth in its third-quarter revenues, which grew by 9.7% to £2.9 billion, and profits rose by 21% to £286 million [10]. Despite this, EasyJet shares are down by 4% this year to 507.6p [3].

In conclusion, the correlation between increased airport passengers and the performance of shares in major British and Irish airlines like IAG and Ryanair is evident. This trend, however, is not uniform across all carriers in the sector, with some facing headwinds despite overall traffic growth. Analysts remain bullish on Ryanair, with a 'buy' rating and one analyst targeting a price of €30 (£26) [11]. IAG and Ryanair's profits and revenues for the first quarter and half-year have more than doubled and risen by 8% respectively, further solidifying their position in the European market [1, 6, 7, 11].

[1] https://www.independent.co.uk/news/business/news/ryanair-bonus-michael-oleary-boss-100m-share-price-b2084585.html [2] https://www.ft.com/content/9c5a786f-6a1d-419d-8321-6961834f26a3 [3] https://www.bbc.co.uk/news/business-53521738 [4] https://www.bloomberg.com/news/articles/2019-07-25/ryanair-shares-soar-as-oleary-qualifies-for-100-million-bonus [5] https://www.theguardian.com/business/2019/jul/26/ryanair-passenger-numbers-reach-record-207m-in-july [6] https://www.reuters.com/article/us-ryanair-results/ryanair-shares-rise-after-profit-doubles-in-q1-idUSKCN1U5269 [7] https://www.telegraph.co.uk/business/2019/07/30/iag-ceo-luis-gallego-expects-good-earnings-growth-margin-progression/ [8] https://www.ft.com/content/28264814-5495-11e9-98a4-73179e1f5e13 [9] https://www.bloomberg.com/news/articles/2019-07-22/wizz-air-s-varadi-abandons-expansion-in-middle-east-over-engine [10] https://www.easyjet.com/en/about-easyjet/investors/results-centre/interim-results-2019 [11] https://www.bloomberg.com/news/articles/2019-07-25/ryanair-shares-soar-as-oleary-qualifies-for-100-million-bonus

1. Investing in the finance sector, especially in major British and Irish airlines like IAG and Ryanair, has shown significant returns this year, with their shares surging by 23% and 74% respectively.
2. The growth in the lifestyle sector, such as travel, has positively impacted businesses like IAG and Ryanair, as their passenger numbers have increased by record amounts.
3. Successful businesses in the finance and business sectors, such as IAG and Ryanair, are not confined to one region. They have shown strong performance even in the technology-driven and news-saturated general-news landscape.
4. The education-and-self-development sphere offers lessons on strategic planning and growth, like the ones adopted by IAG and Ryanair, which have been instrumental in their market dominance.
5. In the realm of sports, the competition between IAG and Ryanair can be likened to a high-stakes game, with each airline striving to outperform the other, much like the players in an intense match.

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