Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious Outperformance
Find Stocks Now

IAG share price faces turbulence as costs headwinds rise

Published 01/11/2023, 04:00
Updated 01/11/2023, 08:12
IAG share price faces turbulence as costs headwinds rise

The IAG share price has come under pressure in the past few months as headwinds in the airline industry continue. The stock was trading at 144.15p on Wednesday, a few points above last month’s low of 137.15p.

IAG’s strong performance but headwinds remain

IAG, the parent company of British Airways (LON:ICAG) and Aer Lingus, published strong financial results last week. The company’s total revenue rose from €16.6 billion in the nine months to September in 2022 to over €22.2 billion. Its revenue rose to over €8.6 billion in the third quarter, up from the previous €7.3 billion.

Its profits also jumped in the same period. The company’s profit after tax jumped to € 2.1 billion in the nine months and €1.23 billion in Q3. Its profits in the same period in 2022 came in at €199 million and €853 million. Further, the company’s debt narrowed from €19.9 billion to €17.2 billion.

IAG’s key brands did well in the quarter. Aer Lingus revenue jumped by 16% while British Airways rose by 20%. British Airway’s profits soared to over 617 million pounds. Similarly, Vueling’s total operating profits jumped to over 282 million euros.

Still, IAG share price has not reacted positively to these metrics. For one, there are signs that the business is slowing while costs are rising. As I warned before its earnings, there are concerns about jet fuel.

Data by IATA shows that the average jet fuel price stood at $937.80 per ton. There are signs that prices will continue rising in the coming months. In a statement on Thursday, the World Bank warned that Brent could surge to over $150 per barrel if the war between Israel and Hamas intensifies.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Jet fuel is a major cost for airlines. Wages are other costs and there are signs that they are rising. British Airways is still negotiating with pilots and cabin crew about higher wages. This means that the company’s margins will continue thinning.

IAG share price forecast

IAG chart by TradingView

The daily chart shows that the International Consolidated Airline (IAG) stock price has come under pressure in the past few months. It formed a double-top pattern at 173.60p. In price action analysis, this pattern is usually one of the most bearish signs.

The stock remains below the 50-day and 100-day Arnaud Legoux Moving Averages (ALMA) Also, it has moved slightly above the 38.2% Fibonacci Retracement level. Therefore, the outlook for the stock is bearish, with the next level to watch will be the support at 127.95p, the lowest level on March 20th.

The post IAG share price faces turbulence as costs headwinds rise appeared first on Invezz

This article first appeared on Invezz.com

Latest comments

You mean if the ‘war’ spreads… it’s got no chance of intensifying between Israel and Hamas as there will soon be no Hamas and that should be the end of it unless others wade in, which arguably they would have by now with Isreal’s forces almost entirely focused on one area destroying Hamas
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.