Proactive Investors - Analysts at UBS have noted short-term capacity discipline and “strong demand seen from leisure travel and recovering business traffic” are driving improved capacity among European and UK airlines, though have warned that medium-term trends are “more uncertain”.
Data supplied by aviation analytics platform Cirium suggest that short-haul (i.e. flights shorter than 3,000 miles) capacity will only return to 2019 levels in the fourth quarter of 2023, though “likely in our view it won’t” even reach that, said UBS.
Meanwhile, long-haul capacity in the fourth quarter is expected to remain at least 5% lower than 2019 levels.
Long-haul capacity in the second quarter shows year-on-year growth of 31%, to 93% of 2019 levels, while preliminary long-haul data for the third quarter capacity shows
growth of 21% to 92% of 2019 levels.
Short-haul capacity in the second quarter shows year-on-year growth of 9% to 94% of 2019 levels, while preliminary short-haul data for the third quarter shows growth of 8% to 95% of 2019 levels.
“We see uncertainty around capacity discipline when looking at deliveries,” noted UBS analysts.
The current fleet of long-haul and short-haul planes across all of Europe and the UK is 4,869 compared to 5,064 at the same time in 2019.
Furthermore, “with environmental headwinds we could see accelerated fleet retirements over the medium term”, placing a greater need for capacity discipline among airlines.
“Nevertheless, we see first-quarter results as a positive catalyst,” said UBS, rating both Lufthansa (LON:0H4A) and Air France-KLM (LON:0LN7) as a buy and British Airways-owner International Consolidated Airlines Group (LON:ICAG) neutral.