Aegean Airlines: strong CF, but waiting for an earnings inflection point (stays HOLD)

We have revised our forecasts for Aegean Airlines, following the 1H25 results, maintaining our HOLD rating and nudging our 12M PT upwards to EUR 14.5. Our forecast changes for 3Q-4Q25E are minor, reflecting stronger-than-expected capacity growth. Management remains upbeat on the late-summer demand, and we have raised our 2H25E earnings slightly vs. our prior estimates. We continue to highlight Aegean’s strong cash generation, which could improve in FY26E, as PDPs turn into inflows. With a core airline EV (ex-net cash, ex-financial investments) of c.EUR 500-600m, sustained FCF could see cash, alone, covering the current market cap by the decade-end: a compelling long-term case for a BUY. In the near term, however, earnings may continue to compress: softer fares and lower utilisation (engine-related groundings) weigh on this year, while 2026E could see peak grounded aircraft alongside rising CO2 allowance costs. Offsetting factors include the weak USD and cheap fuel, but visibility on the 2026E fares is minimal so far. Accordingly, it is difficult to call an earnings and margins inflection point at this stage. We therefore maintain our cautious stance in the near term, although the structural cash flow story supports a long-term positive view.