IAG and Wizz Air Upgraded, EasyJet Cut at BofA

Airline shareholders will have been cursing their luck over the last few years, but BofA analyst Muneeba Kayani believes International Consolidated Airlines (LON: IAG) and Wizz Air (LON: WIZZ) shares are heading higher, despite the ongoing headwinds.

Since the onset of the pandemic, airlines have struggled to gain any momentum, with restrictions essentially shutting down international travel for the most part and then soaring fuel prices and staffing issues impacting the recovery in 2022. However, heading into 2023, despite the inflation headwind, most airlines have reported strong demand, and a more sustained recovery for the sector may be on the cards.

As a result, BofA analyst Kayani upgraded both IAG and WIZZ to Buy from Neutral in a research note to clients on Thursday, telling investors she expects 2023 to have a slow start for European airlines with a recovery emerging in the second quarter of the year. 

In addition, Kayani explained that demand could surprise to the upside in 2023and even though balance sheets are stretched, there is enough liquidity. At the same time, potential acquisitions provide the bull case for the European airlines sector. 

IAG shares are down around 0.7% at the time of writing on Friday, while Wizz Air has risen around 0.23%, although both stocks have gained about 20% or more in the last three months. 

While Kayani was bullish on WIZZ and IAG shares, the analyst double-downgraded easyJet to Underperform from Buy, assigning a 340p price target on the stock. The analyst explained that while she is bullish on IAG and Wizz, easyJet is the only airline it covers that has unit costs expected to stay above pre-pandemic levels.

EasyJet shares are up 0.27% at the time of writing.