Analysts at Liberum view the British Airways owner as a long-term structural winner in the European airline industry, thanks to efficient costs and a strong capital allocation discipline through its multiple operating companies.
It’s also got the strongest slot position at Heathrow, a key airport connecting Europe to the Americas.
At the end of June it had liquidity of EUR10.8bn and its balance sheet will be “more than strong enough” to withstand turbulence from depressed demand or persistent government limitations on travel.
“The path to recovery from the pandemic will be neither straight nor simple, but we are confident that air travel will make a convincing recovery in the medium term,” the broker said.
“While we had been cautious in our assumptions to travel restrictions being eased for the summer, and there has been a significant relaxation in many cases compared with the second quarter, the overall trend has still been disappointing.”
Liberum upgraded the stock to ‘buy’ from ‘hold’ and kept its target price unchanged at 215p.
Shares rose 2% to 170.76p on Wednesday at noon.