Zak Mir on Airlines After The 2nd Ryanair Warning RYA, EZJ & IAG

By Zak Mir.

One of the best stock market rules kicked in again today in the form of “abrupt culture” specialist Ryanair (RYA) delivering its second profits warning. The question now is how long do we have to wait for warning number 3?

Ironically, having just flown on EasyJet (EZJ), there is a hint that it may be set to copy what was a winning formula for the Dublin based carrier.  At the same time the extended rally in flag carrying rival IAG continues – reversing the trend of much of the past decade in terms of the battle between the no frills and the flag carriers.

Ryanair (RYA): 

• New leg / gap down almost inevitable after September warning and failure by the stock to fill the top of the chart gap to the downside.
• Below September support at €5.76 risk keeps shares in bearish mode.
• Target at the floor of a June price channel as low as €4.70 over the near term. 

EasyJet (EZJ): 

• Negative read across from Ryanair warning sees 3% decline for EasyJet shares.
• Unfilled gap to the downside below 50 day moving average a strong negative signal.
• Likely probe to post June support under 1,200p and under 200 day moving average even if that is the end of recent consolidation. 

International Consolidated Airlines (IAG): 

• Extended rally since start of Q2 2013 continues for IAG.
• Seen as possible beneficiary of no frills players recent demise.
• Could still see shares stretch towards 380p as a year end target for 2013.