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Home>European airlines take off after Monarch collapse leaves room for rivals

European airlines take off after Monarch collapse leaves room for rivals

European airlines take off after Monarch collapse leaves room for rivals

10/02/2017

By Sara Sjolin, MarketWatch

Price wars and terrorist attacks have pushed some European airlines into financial difficulties

One company's bankruptcy is its rivals' treasure.

At least that's been the case this time for European airlines and travel stocks on Monday after low-cost U.K. carrier Monarch Airlines went into administration (http://www.marketwatch.com/story/monarch-airlines-collapses-leaving-110000-passengers-without-flights-2017-10-02) and canceled 300,000 booked flights and packaged vacations. The bankruptcy has been described as the U.K.'s biggest ever airline collapse, coming on the heels of a fierce price war among European carriers. Around 110,000 people are stranded at vacation destinations, but the U.K.'s Civil Aviation Authority will bring the travelers home.

"The collapse of a rival is to the potential benefit of publicly-quoted rivals such as International Consolidated Airlines (the parent of BA, Aer Lingus and Iberia), easyJet, Wizz and Ryanair, as it could take capacity out of the market, or at least present them with a chance to acquire airport slots, routes and staff from a distressed seller," said Russ Mould, investment director at AJ Bell, in a note.

Shares of IAG SA (IAG.LN) (IAG.LN) climbed 1.9% in Monday's trade, easyJet PLC (EZJ.LN) rallied 4.8%, Wizz Air Holdings PLC (WIZZ.LN) put on 3.8% and Ryanair Holdings PLC (RYAAY) ascended 2.3%.

Meanwhile travel operators also got a boost, with shares of Thomas Cook Group PLC (TCG.LN) up 1.9% and TUI AG 1.5% higher.

The battle for passengers in Europe has driven ticket prices lower in recent years, but also pushed several airlines into financial difficulties. Germany's second-biggest carrier Air Berlin (AB1.XE) filed for insolvency in August, while Italian flagship carrier Alitalia's assets are under the hammer after that company become insolvent too.

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