Bernstein Names IAG, Ryanair as Top European Airline Stocks Ahead of Earnings

Bernstein has identified International Airlines Group (IAG) and Ryanair as its leading investment picks in the European airline sector ahead of the upcoming quarterly earnings season, citing strong financial momentum, improving market conditions, and resilient travel demand.

The investment firm believes Europe's aviation industry continues to perform well despite recent macroeconomic uncertainties. Favorable revenue trends, disciplined capacity management, and easing fuel-related concerns are expected to support airline profitability in the coming months.

IAG tops Bernstein’s rankings due to its ability to consistently deliver robust earnings and generate strong cash flow. The airline group, which owns British Airways, Iberia, Aer Lingus, and Vueling, posted impressive first-quarter revenue per available seat kilometer (RASK), which increased 3.5% compared with the same period last year. Bernstein expects that momentum to continue into the second quarter.

The brokerage forecasts IAG’s quarterly earnings before interest and taxes (EBIT) to come in around 7% above market consensus. The outlook is supported by strong demand across key markets, particularly Spain and North Atlantic routes, where travel demand has remained resilient.

Bernstein also highlighted a favorable industry backdrop heading into the peak summer travel season. The firm noted that concerns over higher fuel costs have eased, while limited capacity growth on the important UK-to-North America corridor is helping airlines maintain pricing power and healthy profit margins.

Ryanair ranked second on Bernstein’s list, with analysts noting that the Irish low-cost carrier has been less affected by recent fuel market volatility than many of its European rivals. The airline also benefits from one of the strongest balance sheets in the sector and maintains extensive fuel hedging, helping protect profitability against fluctuations in energy prices.

Although Ryanair management recently adopted a more cautious outlook on ticket yields during its fiscal-year results, Bernstein believes booking trends are improving as travelers return to purchase flights. The firm projects the airline’s quarterly net income to exceed consensus estimates by roughly 4%.

Overall, Bernstein expects both IAG and Ryanair to remain among the strongest-performing European airline stocks, supported by solid operational execution, resilient passenger demand, and favorable industry conditions through the busy summer travel season.