Credit Suisse still likes airlines EasyJet PLC (LON:EZJ), Ryanair (LON:RYA) and Wizz Air (LON:WIZZ) for their recovery potential even though it increased its loss estimates for the trio in the current year.
EasyJet PLC (LON:EZJ) in particular might be the surprise package for recovery in 2002 if European progress on vaccinations continues at its current pace, according to transport analysts at the broker.
Credit Suisse has raised its loss estimates for this year GBP1.17bn from GBP900mln to reflect the ongoing UK travel uncertainty but numbers for beyond 2022 are unchanged, as is its ‘outperform’ rating.
All eyes are on easyJet’s GBP2bn debt but meaningful intra-EU bookings can have a significant impact on reducing this, says the broker.
EZJ revenues were GBP2.3bn in the fourth quarter of 2019, around half of which came from non-UK routes.
Up to two-thirds of its intra-EU schedule will operate this fourth quarter with scope to generate several hundred million pounds from forward bookings.
Lease liabilities also represent half of the net debt and with 35% of leased aircraft under negotiation in a very soft market, this offers potential for significant net debt reduction.
The outlook for short-haul is also ‘compelling’ with a rebound in demand on top of reduced capacity potentially sending easyJet’s profit per seat back to its previous record levels.
These three things might about EZJ’s leverage could surprise the market positively, the broker concludes.