WOOD Flash – Aegean Airlines: 2Q22 in line, encouraging guidance on 3Q trading

Aegean’s 2Q22 results came in nearly spot on our estimates. Management confirmed that the summer traffic has been strong so far, and it expects revenue and profitability to at least match the 3Q19 levels. This is remarkable, in our view, considering the elevated fuel prices and the competitive pressure from its peers, including Wizz Air (BUY, PT GBP 30) and Ryanair (NOT RATED) – overall, the capacity allocated to Greece seems to have exceeded the 2019 levels slightly this summer. The number of passengers at Athens Airport has been trailing the 2019 levels by only c.5-7% during the summer months, and some of the islands are seeing a higher numbers of tourists than in 2019. Aegean is a major beneficiary of this trend, and we expect the airline to generate EBITDA of around EUR 140-150m in 3Q22E alone. Barring the COVID-19 induced restrictions on flying, we believe Aegean should end the year in the black. The re-fleeting into Airbus neos is continuing and, aside from fuel efficiency, should also translate into lower maintenance and depreciation unit costs. Having entered the pandemic with a robust, net cash balance sheet, which was boosted further by the EUR 120m State aid and EUR 60m equity raising, we believe that Aegean is well-positioned to navigate what could be a lean winter ahead. We maintain our BUY rating on the stock.