Broker snap: RBS cuts airline figures across the board

19th Sep 2011 12:08

RBS has cut its target prices for airline peers easyJet, International Consolidated Airlines (IAG), Ryanair and Flybe, after assessing August traffic data across the industry."Airlines may, or may not, be on the cusp of an inflection point in trading. Cargo results are deteriorating. Passenger data in August held up well. On average, load factors rose marginally, slightly ahead of the recent trend of softening loads," the broker said.EasyJet's traffic rose 6.5% last month, while the load factor (a measure of how full each plane is) fell 0.1 percentage points (pp) to 92.2%. "We are cautious about inferring too much about yields from load factor performance - last December quarter easyJet reported great loads but turned out to have anaemic yields," RBS analysts said. The target price is scaled back to 325p, from 450p. Nevertheless, a buy rating is kept.IAG reported good figures in August, with traffic rising 2.2% while the load factor edged up 0.1pp to 84.8%. However, with an uncertain economic outlook, the broker said that it sees greater risks for carriers with long-haul premium traffic exposure. The target price is slashed from 165p to 154p and a hold rating is confirmed.Ryanair's August traffic rose by 6%, with a stable load factor of 89%. "The volume was slightly lower than the high single digit we expected, but load factor was as expected." The target price is cut from €3.50 to €3.09, but a buy recommendation is retained.Flybe is also labelled as a buy, but the target price is reduced to 123p, from 225p previously.BC