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HSBC rates easyJet winner in budget airline contest

HSBC, in two separate broker circulars, provided a list of questions it would like to ask both easyJet and rival Ryanair

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Both Ryanair and easyJet are facing headwinds from the weaker pound

The budget airlines sector on Tuesday received the up-close-and-personal treatment from a leading City bank, which rates easyJet (LON:EZJ) the clear winner.

HSBC, in two separate broker circulars, provided a list of questions it would like to ask both easyJet and rival Ryanair (LON:RYA) in face-to-face meetings with management.

The pressing question for the latter was the issue of cash returns and whether it will continue with the share buyback programme, or look to bolster dividend payments.

Analyst Andrew Lobbenberg was also keen to get an up-to-date revenue forecast from both companies with Ryanair predicting a 13-15% unit decline in the next six months and easyJet expecting a mid to high single digit fall.

Both are facing headwinds from the weaker pound - and during the summer the terror threat hit bookings to North Africa.

However, an early snowfall at certain ski destinations may have encouraged holidaymakers to start booking up flights for winter breaks, the analyst pointed out. Also the weaker pound should encourage tourist into the UK, he added. 

Lobbenberg repeated his ‘buy’ up 1,300p on easyJet and rates Ryanair (LON:RYA) ‘hold’ with a target price of 13.5 euros.

Quick facts: easyJet plc

Price: 659.8 GBX

LSE:EZJ
Market: LSE
Market Cap: £2.62 billion
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