Aegean Airlines: margins and fares normalising, after stellar 2023 (stays HOLD)
We maintain our HOLD rating on Aegean Airlines, adjusting our 12M price target (PT) to EUR 11.0/share, implying 2% upside. In 3Q24E, we expect the RASK to drop 3% yoy, driven by high competition, industry-wide pressure on fares, and the high base of last year. This will likely put some pressure on profitability. We pencil in the 3Q24E EBITDA margin to fall 4ppts yoy, to 31%, driven by a weaker RASK and higher ex-fuel unit costs (due mainly to GTF engine inspections) in the key summer quarter. Despite the groundings, we expect the ASK to grow by 5% yoy in 2024E, as wet leases and the extensions of existing leases allow Aegean to continue to cater to the strong tourist demand for Greece. However, as yields soften, we forecast the 2024E EBITDA at EUR 380m, down 5% yoy. At a 22% margin, this is in line with the pre-pandemic (2014-19) run rate, with the RASK down 2% yoy and the ex-fuel CASK up 3% yoy in 2024E. This still brings the RASK over CASK to EUr 1.0/ASK for 2024E, almost double the 2014-19 run-rate. On our 2024-25E, Aegean is trading at 4.3-4.0x EV/EBITDAs and 8.4-8.0x P/Es.Aegean Airlines is an airline carrier based in Greece. Co. is engaged in aviation transportation, providing services that concern the transportation of passengers and commodities in the sector of public aviation transportation inside and outside Greece, conducting scheduled and unscheduled flights. Co. provides full service, premium quality short and medium haul services. Co. maintains a network of 145 destinations, 111 international in 45 countries and 34 domestic destinations. Co. is a member of global airline network, the Star Alliance network.
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