IAG’s share price was under pressure over the last few weeks, as investors focused their attention on transatlantic travel in light of the trade tensions that continue between China and the US. On Monday it was at 328p, just a few points lower than the high for this year of 340p. The stock is still 55% higher than its April low.
British Airways parent seeing more demand
Since the beginning of the US-EU trade war, IAG has become the focus.
As with other airlines, it said the demand for leisure and business travel had slowed. As companies adjusted their budgets and to the new norm, business travel decreased.
The company stated in a Monday statement that there were signs the demand for transatlantic flights was easing over the last three weeks. Luis Gallego was the CEO who made this statement to Bloomberg.
The company may be able to boost their numbers in the coming summer months if they see more bookings on its most lucrative route.
The trade issue remains being volatile. The US and the UK have reached an agreement, but there’s a chance that the relationship with the European Union could worsen.
Trump threatened recently to impose 50% tariffs on European goods. He noted that the talks weren’t moving at the pace expected. After speaking with Ursula von de Leyen (the president of the European Union), he backed off.
There is still a chance that both sides won’t reach an agreement before the deadline in July. The US is making unreasonable demands. One of them includes the elimination of value-added tax (VAT), a measure it considers discriminatory.
IAG financial results
Recent results show that company numbers have continued to do well during the first half year. The company’s revenue increased by 9.6% while its operating profit rose from EUR130 to EUR198 millions.
The company’s profit for this period jumped to EUR176 millions, and its revenue grew to EUR7.04 Billion. The company also boasts one of the strongest balance sheets, with its cash, equivalents and interest bearing deposits jumping to EUR9.35billion.
The company’s balance sheet has been boosted by its efforts to reduce its debt. The company’s debt has decreased from EUR17.3 billion to EUR15.9 billion.
IAG’s strong balance sheet helped it place a large order with Boeing and Airbus for the expansion of its network.
IAG Share Price Analysis
On the daily chart, IAG’s stock price hit a low of 210p at 7 April and bounced up to a peak of 340p by May. The daily chart shows that the IAG stock price bottomed out at 210p on April 7, and then bounced back to a high of 340p in May.
A bullish cross-over pattern has been formed between the 50-day and100-day Exponential Moving Averages. This is a very bullish signal.
The most probable scenario would be that the stock will bounce back and perhaps hit the 368p resistance level, which is the high point of the year. This would indicate a surge of 10% above current levels.
The forecast for the IAG share prices as transatlantic demand begins to recover could be revised as new information unfolds
