European Aviation Daily: Icarus – 22 May 2026

Research evidence excerpt

European Aviation Daily: Icarus – 22 May 2026

ropean airlines (MSCI Europe Airlines Index down 16% YTD). We think the market has

been swayed by Lufthansa’s confidence on recovering high fuel costs.

Our FY26 Adj. EBIT of €1.10bn is 39% below Bloomberg consensus.

In the event that the conflict were to de-escalate, we would expect all airline shares to rise. As

discussed in our recent scenario analysis (Strait scenarios — significant gearing to the timing of

reopening, 15 May), we see stronger upside in the tourism-focused businesses such as OW-rated

Jet2, easyJet and TUI and weaker upside in UW-rated Lufthansa.

Valuation: Lufthansa trades on 22.9x 2026 PE vs airline average 11.2x, on FY26 EV/EBITDA of 5.1x

vs sector average 3.7x.

Downside drivers: FY26 profit guidance is in our view unrealistic, anticipating greater

sustainability of March and April premium pricing on Gulf-overflight routes. We think the launch

of Gulf carrier fare sales would be a key catalyst for making this excessive optimism apparent,

though a formal profit warning might not come until quarterly results. We think continued

labour unrest could bring further adverse catalysts. Labour relations remain tense with

Lufthansa mainline pilots.

Upside risk: The establishment of credible peace in the Middle East would likely cause all

airlines to rise. However, such a development would accelerate and exaggerate the

disappearance of Lufthansa’s Gulf windfall gains. Labour settlement and further stake buying by

Kuehne also pose upside risks to the stock.

easyJet: The future’s bright, the future’s ... less bad than the present

Among the largest estimate cuts in our coverage and largest share price decline YTD. Three

months ago we debated when PBT might reach £1bn. Today we forecast <£100m for FY26. It's in