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IAG, easyJet, Ryanair: can airline stocks keep rebounding?

Airline stocks have enjoyed good gains over the past six months, and in the longer term should continue to rise. Passenger numbers are still on an upward trend, but stock prices in the sector have lost momentum in the short term.

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What’s the outlook for airlines?

The outlook for passenger numbers continues to improve, with the International Air Transport Association (IATA) forecasting a return to 52% of 2019 levels during 2021. Vaccination programmes and improvements in testing will provide an additional boost over time as well. Nothing is certain of course, but the industry and investors globally continue to expect a return to something like normality during 2021, with 2022 seeing further improvement.

The challenge for airlines will be to see whether earnings can live up to this optimistic view. In the long-run, this is what will provide support for further gains in stock prices, which should in turn lead to improved dividend payments.

IAG share price – technical analysis

IAG provides a classic example of how a lack of further good news can stop a rally in its tracks. After surging in November 2020 and into the beginning of 2021, the shares have been unable to recover their March highs. Support around 190p has held, but a gentle series of lower highs since mid-March has kept a lid on any further gains. A rally to 210p and above is needed to clear trendline resistance and take out the most recent lower high.

IAG chart Source: ProRealTime
IAG chart Source: ProRealTime

easyJet share price – technical analysis

Aside from a brief surge in early May, the easyJet price has struggled to hold above £10.50. Unlike IAG however there is as yet an absence of a sequence of lower highs to cement a negative short-term view. Meanwhile dips towards 900p have found buyers, providing a short-term floor for the stock and a suitable area for stops for those expecting a renewed move higher.

easyJet share price Source: ProRealTime
easyJet share price Source: ProRealTime

Ryanair share price – technical analysis

For Ryanair, the €17.00 area has proven to be a wall of resistance, holding back progress since December. At least, however, we have higher lows in play since the end of January, providing some positive momentum, even if that momentum seems unable to deliver the needed break higher. A drop back below €15.50 would point towards a drop back in the short term.

Ryanair chart Source: ProRealTime
Ryanair chart Source: ProRealTime

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