Analysts at JP Morgan downgraded British Airways parent company International Consolidated Airlines Group from 'neutral' to 'underweight' on Thursday as it turned "more cautious" on the sector.
Source: Sharecast
JP Morgan said its caution on the sector was due to the potential for large capacity increases to bring yields down against a backdrop of weaker economic growth.
"We generally forecast margins down; fuel/ex-fuel cost pressure is elevated, and unit revenues unlikely to grow," said JPM. "Balance sheets and valuations do not look overly stretched, however, earnings pressure could send stocks lower."
As a result, JP Morgan cut IAG to 'underweight' as it said it sees "potential profitability pressure" in 2024 due to unit revenue concerns from capacity growth.
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