Redburn Atlantic downgraded shares of United Airlines (UAL) to Neutral from Buy and European airlines Air France (AFLYY (OTC:AFLYY)) to Sell, and International Consolidated Airlines Group (OTC:ICAGY) and Wizz Air (LON:WIZZ) (WZZZY) to Neutral in a note Tuesday.
In the memo, assessing both US and European carriers, the firm said its top-down view leaves them preferring European low-cost airlines.
"Demand for air travel shows little signs of slowing, with bookings remaining healthy and pricing commentary generally supportive. However, following very robust pricing last summer, maintaining pricing growth throughout 2024 will become a challenge," stated analysts at the firm.
"We argue success here will ultimately hinge on how capacity and competitive intensity develops. European short-haul is best placed," they added.
Conversely, Redburn is cautious about US domestic supply given the potential growth in the fleet, which analysts calculate is already 13% larger – in seat terms compared to 2019.
"This leaves us concerned that the hockey stick-shaped recovery implied in domestic pricing guidance is overly ambitious," explained the firm "Having been bullish on long-haul supply throughout 2023, our work here now leaves us less optimistic."
Overall, Redburn considers Ryanair and easyJet as the best-placed airlines.