Autumn bookings lift shares for Ryanair, EasyJet, and Aer Lingus owner

European airline shares have continued to have a torrid time as fuel costs rose and the inflation crisis has raised doubts about household spending on winter and summer holidays. File picture

Ryanair, EasyJet and IAG — the owner of Aer Lingus and British Airways — have said demand for travel was holding up, calming worries that pressure on household budgets could stall recovery from the pandemic.

Shares in IAG jumped 7% after an unscheduled announcement to report better-than-expected profit for its summer quarter and a confident outlook. IAG, which also owns Iberia and Vueling airlines, said forward bookings remain at expected levels for this time of year "with no indication of weakness".

Meanwhile, Ryanair said its bookings this autumn and for the Christmas holidays were ahead of pre-Covid levels, and it again forecast average fares would rise by more than expected until the end of March. Ryanair shares rose 4%.   

Johan Lundgren, chief executive of EasyJet which had issued forecasts for its annual results, was more cautious, saying that there was "uncertainty out there", but the airline also said there was cause for optimism.

"Despite the difficulties that households have, we still know that holidays and travel are top of the list when people can prioritise what they want to do with their disposable income," he told reporters. EasyJet shares rose by 1% in the session. 

However, European airline shares have continued to have a torrid time as fuel costs rose and the inflation crisis has raised doubts about household spending on winter and summer holidays. Shares in EasyJet and Ryanair are still down by almost 50% in the past year, and IAG shares have fallen almost 37%. 

Analysts said the strength of the dollar against the euro and sterling could boost transatlantic carriers like IAG. 

Ryanair's chief executive Michael O'Leary said that demand appeared to be supported by savings built up during the pandemic, but he also said that customers' disposable income will get hit by increases in interest rates and the cost-of-living crisis this winter.

Hargreaves Lansdown equity analyst, Sophie Lund-Yates, said IAG's upgrade was "a very welcome surprise, but whether the spritely mood music can be maintained is another question entirely". 

Reuters and Irish Examiner