Graham Spooner, investment research analyst at The Share Centre, explains what the collapse of Monarch Airlines could mean for personal investors interested in the airline sector.

“easyJet is up over 3% in early trading on the back of the demise of Monarch, the UK’s fifth largest airline. With the poor press that Ryanair are currently getting and in view of their ongoing problems, easyJet could be the best placed to benefit.

"The collapse of Monarch may alleviate some of the pressure on over-capacity in the sector, while also enabling remaining companies to massage the prices on certain routes higher.

easyJet 2 by Jonathan Palombo (CC-BY-2.0)

By Jonathan Palombo (CC-BY-2.0)

“However investors should appreciate that the sector is likely to remain difficult for operators, with continued pressure from new entrants such as Norwegian and the recent backdrop of the 25% rise in the oil price since June.  Operators will be hoping that that trend does not continue.  Other pressure points are of course Brexit, the weak pound and the threat of terrorism.

“Our pick in the sector remains British Airways owner International Consolidated Airlines (IAG), which we feel should continue to benefit from restructuring that took place a few years ago. Although not directly involved at the cheaper end of the market IAG has already expressed interest in taking some of Monarch’s slots, planes and staff.”

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