Morgan Stanley | Axel Stasse (analyst) believes that EU flag carriers are even better positioned than their US counterparts and reiterates IAG as his Top Pick. Our analysts in the US see a good setup for US companies given the greater strength of global traffic, but Stasse believes that European airlines offer very attractive relative value, with a growing discount to US airlines that is increasingly difficult to justify, given that the 3-year EBIT consensus shows broadly comparable growth. The economist points out that IAG is the cheapest airline in both regions, despite having industry-leading margins, a strengthened balance sheet, strong FCF visibility and the best transatlantic exposure in its class. Delta Airlines remains the preferred name in the US.
IAG, Top Pick: cheapest airline in both EU and US, despite leading margins in sector and best transatlantic exposure in its class
