IAG and Easyjet will still need more liquidity in 2021, Morgan Stanley says

News of Pfizer and BioNTech's Covid-19 vaccine candidate's greater than 90% efficacy is positive for investor sentiment and reduces the probability of Morgan Stanley's 'bear case' ensuing, the broker said.

However, that finding from the tandem's first interim efficacy analysis was 'in-line' their current recovery curve, Morgan Stanley said.

Nor did they think that they were alone.

Furthermore, some data was as yet unknown, including regarding the duration of immunity.

"A lot of the recovery upside is now priced in [...] Moreover, we think our estimates (and consensus) already assumed a recovery in 2021, so the news de-risks our bear case, but does not change our base case at this point," they said.

Across Airlines, they saw the best risk-reward in RyanAir, labelling it the "high quality" name in the space.

They also pointed out that the latest news from Pfizer and BioNTech should now lead to a "significant" improvement in demand for airlines over the fourth quarter of 2020 and the first quarter of 2021.

Hence, at their current average burn rates, IAG, Lufthansa and Easyjet might all still need to "access more liquidity resources" in 2021.