North America weakness could spread, Barclays says cutting Lufthansa and IAG

Barclays highlights a looming risk for European flagship airlines as it expects U.S. airlines' profit warnings to spread and economic tensions to threaten demand

Given European airlines' high exposure to the North American market, revenue weakness flagged by domestic U.S. airlines could extend to European carriers, the broker says

It downgrades Lufthansa LHAG.DE and IAG ICAG.L to "underweight" from "overweight" and keeps Air France-KLM AIRF.PA at "underweight"

Lufthansa is down 2.4%, Air France-KLN slides 3.5% at 0934 GMT

According to the broker, increased tension between the U.S. and Europe might make U.S. travellers feel less comfortable travelling across the North Atlantic

"The weakening wealth effects that emerge from volatile financial markets may particularly weigh on the confidence of the affluent premium leisure market," the broker adds, referring to U.S.-originating passengers

All in all, Barclays believes the North Atlantic to be a good market and expects major European and U.S. airlines will be profitable in the area this year, "but less profitable than we thought (...) two weeks ago"