Easyjet (EZJ) & Wizz Air (WIZZ): Should you hold these aviation stocks?

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Easyjet (EZJ) & Wizz Air (WIZZ): Should you hold these aviation stocks?

 Easyjet (EZJ) & Wizz Air (WIZZ): Should you hold these aviation stocks?
Image source: OlegRi, Shutterstock.com

Highlights 

  • The demand outlook for jet fuel now looks uncertain as several countries including the UK, Australia, Japan, Hong Kong and more, have implemented border restrictions
  • Earlier, IEA report had expected that jet fuel demand can grow at a rate of 550,000 bpd to 5.9 million bpd in Q4.

A recent report of energy body International Energy Agency (IEA) published on 16 November had forecasted jet fuel demand to grow at its strongest pace of 550,000 barrels per day (bpd) to 5.9 million bpd in Q4.

However, the demand outlook for jet fuel now looks uncertain as several countries including the UK, Australia, Japan, Hong Kong and more, have implemented restrictions at their borders following the emergence of the new Omicron covid variant.

 

According to a Reuters report quoting a research note from energy consultant firm FGE, the Omicron variant’s real risk lies in the impact it will have over the reinforcement of travel restrictions during the winter season and of again decreasing jet fuel demand significantly below its current levels of about 6 million bpd.

Let us take a look at these 2 stocks in the aviation sector, which are a part of the FTSE 250 index, and explore their investment prospects amid the latest development:

  1. Easyjet PLC (LON: EZJ)

Easyjet is a low-cost airline. The company reported its FY 2021 results today, its FY 2021 headline loss before tax stood at £1,136 million, ahead of consensus. The group had previously posted a loss £835 million in FY 2020.

The airline estimated its Q1 2022 capacity to be about 65 per cent of its pre-pandemic levels in 2019 and load to be above 80 per cent, based on current travel restrictions.

Furthermore, it forecasts its Q2 2022 capacity to be at about 70 per cent of its Q2 2019 levels. It aims to reach pre-pandemic levels of capacity by 2023.

EZJ share price and volume

Image source: Refinitiv

Easyjet’s shares were down by 2.01 per cent, trading at GBX 492.50 on 30 November at 09:59 AM BST, while the FTSE 250 index was at 22,514.08, down by 1.07 per cent.

The company has a market cap of £3,809.76 million as of Tuesday.

  1. Wizz Air Holdings PLC (LON: WIZZ)

Wizz Air is a European low-cost airline company. The airline’s revenue for the 6 months to 30 September, rose by 86.8 per cent to EUR 880.4 million, compared to EUR 471.2 million in the year before.

During the period, it returned to positive earnings before interest, tax, depreciation and amortisation (EBITDA) at EUR 164.3 million, compared to a negative EBITDA of EUR 80.9 million in the previous year.

WIZZ share price and volume

Image source: Refinitiv

Wizz Air’s shares were down by 0.84 per cent, trading at GBX 3,900.00 on 30 November at 10:12 AM BST. The company has a market cap of £4,058.36 million as of Tuesday.

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