Wizz Air's decision (16 Jun) to abandon its IPO (initial public offering) provides a telling snapshot of the state of the airlines sector. We suggest investors exit International Consolidated Airlines (IAG) in addition to budget operators EasyJet (EZJ) and Ryanair (RYA). We would also suggest caution with regards to the tour operators Thomas Cook (TCG) and TUI Travel (TT.).

Low-cost Hungarian carrier Wizz only flagged its intention to float last month. It unveiled plans to raise €200 million before citing 'volatility in the airline sector' as the reason for its decision not to go ahead; at least not for another six months or so. This follows profit warnings from German flag carrier Deutsche Lufthansa (LHA:XETRA) (11 Jun) and Irish carrier Aer Lingus (AERL) (12 Jun).

The sector has sold off as oil prices have risen ahead of a possible disintegration of Iraq disrupting Middle Eastern supplies. Lufthansa has flagged weaker than expected passenger and freight revenue. This negative sentiment is weighing on tour operators who face a tougher 12 months ahead after a strong run. While Thomas Cook and TUI have both posted reassuring interims share price corrections in the past month tell a different story.

Sell the airlines and keep a very close eye on the tour operators with a view to trimming positions.