Investors should book into Ryanair and IAG, says Bank of America Merrill Lynch

Airline investors should check in with Ryanair and IAG rather than rivals, according to Bank of America Merrill Lynch (BoAML). The broker prefers companies such as the Irish budget carrier and the British Airways and Iberia owner that are likely to see consensus earnings upgrades, it said in a note.BoAML has 'buy' recommendations on IAG and Ryanair, a 'neutral' on Lufthansa and 'under-perform' ratings on Easyjet and Air France-KLM.It said Ryanair was "stealing the baton" from Easyjet as the former copies much of what the latter pioneered, describing the Irish airline's second half yield guidance as conservative.BoAML said: "With no fewer than three 'investor days' in November/December (in our view, a statement of intent & confidence, if ever there was one), alongside strong Q3 traffic and a share price down 14% in the year to date, we would buy the shares here."It added that Lufthansa's planned cost savings were untenable, that Easyjet was struggling to show investors how it would deal with a short-haul price war and AF-KLM was facing competition from Easyjet and Gulf carrier Etihad.