Jefferies initiates coverage of European Airlines, warning of 'turbulence ahead' for the sector
** European Airlines sector is pricing in 20-60% downgrades in 2026 as carbon headwinds enter the P&L and yield expansion is uncertain, Jefferies says
** While pricing in 30-60% EBITDA downgrades in mid-term, the market underplays the self-help opportunities available to the sector, the broker adds
** Jefferies starts Easyjet EZJ.L with "buy", expecting the company to benefit from its growing package holiday business, fleet renewal and self help opportunities
** The broker initiates IAG ICAG.L with "buy", citing resilient business, strong balance sheet, small carbon headwind and a turnaround plan aimed to drive British Airways margins
** Jefferies starts Wizz Air WIZZ.L with "underperform", as it's more cautious than consensus on company's yield and cost trajectory
** The brokerage initiates Lufthansa LHAG.DE with "hold", pointing to significant exposure to Boeing which could delay progress, and saying the company has oldest fleet and lowest margins on broker's coverage list
** Jefferies starts Ryanair RYA.I with "hold", saying while the long term investment case is attractive, the company could see a material cost headwind from carbon and only a small tailwind from new fleet in mid-term
Reporting by Amir Orusov and Anastasiia Kozlova
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