BofA Names Top Airline Picks as Apollo Bid Sparks European Consolidation Bet

BofA Securities contends that Apollo's offer for easyJet may set off the long-anticipated consolidation wave in Europe's fragmented airline sector, redirecting industry priorities from adding capacity toward return discipline. The broker views this environment as advantageous for airlines with scarce fleet capacity, airport slots, and order backlogs, forming the basis of its preferred names in the sector.

Among European carriers, International Airlines Group (IAG) ranks as a BofA Securities favorite. The firm's overall argument is that private equity attention, demonstrated by the contest for easyJet, could bolster airline valuations by more accurately pricing the scarcity inherent in fleets, slots, order books, and large-scale platforms—a trend BofA believes benefits all its high-conviction picks.

Ryanair carries a Buy rating and is BofA Securities' leading choice to capture market share as European consolidation advances. The broker points out that Europe is still considerably more fragmented than the United States, where the top four carriers account for roughly 80% of domestic capacity, while smaller airlines continue to hold about a third of intra-European capacity. As the region evolves toward a U.S.-style structure, BofA sees Ryanair as well positioned.

BofA further notes that Ryanair serves slightly more routes that overlap with easyJet than Jet2 does, yet these make up only about 13% of Ryanair's broader network, capping its direct vulnerability to any alterations in easyJet's route structure.

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