Ryanair (RYAAY) , the controversial European airline founded by Irish businessman Michael O'Leary, is winning the aerial battle for Europe, while German titan Deutsche-Lufthansa (DLAKY) looks set to remain in a tailspin.
But, for both winners and losers in the air transport sector, the latest round of quarterly profit warnings shows the outlook for earnings growth and margins remains fraught with risks for low-cost carriers and regular airlines.
Multiple factors have colluded to drive a deterioration of investor sentiment toward airlines in 2016, sending stock prices lower and placing the sector performance on a par with that of European banks, - not exactly a glowing endorsement.
Recent terrorist attacks across the Continent have placed tourist volumes under pressure and recovering oil prices have driven up the cost of jet fuel from $1.07 to $1.38 per gallon in the three months to the end of June. Both factors are negative for earnings looking ahead.
But the biggest concern overall has been increasing competition, driven by rapid growth in the number of seats available per passenger, which has led overall European seat capacity to rise by 6% in 2015 and a projected 8% for 2016 according to the Centre for Aviation.
So far, discount carrier Ryanair is winning the battle; its capacity utilization, know in the industry as load factor, has risen the most since oil prices began to plummet in late 2014 and, at 94%, is the highest among its major peers. It's also adding capacity in key European hubs, such as Frankfurt Airport, where it will fly four routes and possibly begin to take more business away from Lufthansa's discount unit Eurowings.