Markets

Analysis: Why airline stocks are still struggling to reach pre-pandemic heights

Intense competition and volatile fuel prices are holding regional airlines back, even as their earnings have almost returned to pre-pandemic levels

Airlines are more sensitive to energy price shocks than other travel stocks as they face an immediate impact on fuel costs. Picture: Daniel Garrido

The record-setting rise in European equities masks one part of the market that’s nowhere near recovering from the Covid-induced collapse four years ago: airlines. Investors are sceptical of turning bullish on the region’s cheapest sector due to its erratic earnings profile.

While the Stoxx Europe 600 Index has surged nearly 80 per cent since a post-Covid low in March 2020 and hit an all-time high last week, a gauge tracking regional airlines is up just ...