JPM | Building Broadcast: HEI, HOLN, BZU, AENA, DG: JPMC Construction Daily

Research evidence excerpt

JPM | Building Broadcast: HEI, HOLN, BZU, AENA, DG: JPMC Construction Daily

opean Transport & Logistics Research

team estimates additional annual costs for their coverage of c€600m in total (based off

current carbon prices) as a higher proportion of the sector’s carbon emissions are paid for,

with the highest absolute cost increase at Lufthansa, but highest % profit impact before any

mitigation at Wizz (impacted by low levels of profitability currently). The team would

expect the sector to try and pass through higher carbon costs through higher ticket prices,

where it estimates the Flag Carriers would need to increase RASK by +0.4% on average

to neutralise the EBIT impact, versus a +1.2% average increase in fares at the LCCs.

However, positively, in the team’s view, the proposal will make the European Flag Carriers

more competitive versus the Turkish and Middle Eastern Airlines. The team notes that

these proposals may yet change, as this begins a negotiating process between EU member

states and the European Parliament. Read-across for European airports. Link to the team’s

report.

• Ryanair: Q1 slightly below consensus, with Q2 fares trending modestly down despite

recent uptick. Q1 miss with peak summer fares trending down, which is likely to see the

shares come off a bit today in the view of the JPMorgan European Transport & Logistics

Research team. Ryanair reported Q1 net income at €538m, 7% below company consensus,

driven by fares at -6% impacted by the timing of Easter and ME related uncertainty (versus

down MSD % guidance and JPMe -4%), but offset by better ex-fuel unit costs at +2%

(JPMe +4%). The pricing outlook for Q2 is a bit softer versus prior Ryanair commentary

and market expectations, with Q2 fares trending modestly down versus the prior year