Tuesday, June 6

Barclays boosts IAG in a key week on Air Europa

The shares of International Consolidated Airlines Group (IAG) received an important vote of confidence on Monday from Barclays. The support comes in a key week for the company’s future, given that news is expected about the purchase of Air Europa, which is still hanging in the balance, after the failure of the previous agreement.

The British bank issued a report on the European aviation industry in which it was optimistic about the possibilities of the airline group made up of Iberia, Vueling, British Airways and Aer Lingus, raising the target price of securities listed on the London Stock Exchange 215 to 220 lbs.

The actions of IAG They were trading around 152 pounds in London after falling 2.7 percent from opening at 156.3 pounds. In the Spanish stock market, the fall translated into a decrease from 1.86 euros to 1.84 euros.

The 44.7 percent recovery that Barclays augurs for the actions of IAG, therefore, would suppose that the group of airlines moved around a price of 2.6 euros in the IBEX 35.

A support for IAG which comes in the week during which the airline group and Globalia, the parent company of Air Europa, determined that it would be the deadline to readjust the terms of a new proposal for the acquisition of Air Europa by Iberia, agree to the notice of termination of your previous agreement published in December.

Restrictions continue to affect IAG

Barclays wait to IAG confirm compliance with its operational capacity forecasts of 60 percent compared to 2019 levels during the fourth quarter of 2021, despite having faced unforeseen events such as the new restrictions imposed by the appearance of the omicron variant.

In the eyes of the financial institution, this operational capacity should be maintained during the fourth quarter of 2022, given that some countries such as the United Kingdom have again relaxed these restrictions imposed to fight the coronavirus, and that “the important transatlantic market remains largely open”.

In this context, the bank considers that the yields of IAG they may remain under pressure during the first quarter, supported by a cargo division that will remain strong, but in which the group’s costs will continue to be affected by low operating capacity.

If these operating figures are met, Barclays calculates that the airline’s EBITDA will be 1,300 million euros in 2022, which is why it increases the target price of the air group to around 220 pounds, which leaves a potential recovery 12 months from the 44 percent.

This rise margin, it should be noted, is higher than that offered by the consensus of analysts, which reduces it to 30 percent.

Aviation continues to trust in the summer

Despite the fact that the eternal pandemic will continue to affect the operational capacity of airlines during the first months of 2022, and consequently their results, Barclays points out in its analysis that summer continues to be presented as the time when the sector finally leaves behind the ravages caused by Covid-19.

“For now it appears that airlines have only adjusted January schedules, taking a standby approach for February and beyond,” the report details.

“We think this reflects the fact that expectations for the summer have not changed and therefore airlines want to gradually continue to rebuild their operations in anticipation of a good summer,” he adds.

In this scenario, Barclays clarifies that low-cost carriers that operate short-haul flights such as Ryanair y Wizzair may lead the overall improvement in the industry, but optimism certainly benefits a IAG which, meanwhile, is also studying a capital increase to help rebuild its balance sheet.

The purchase of Air Europa faces its decisive week

While waiting for the arrival of a summer that increases air activity, IAG will have to resolve an acquisition of Air Europa that faces its key week within the deadline set between the two parent companies, but that at this time does not show signs of a positive resolution for either party.

And it is that José Hidalgo, president and founder from Globalia and Air Europe, has assured in an interview to The confidential that despite the intention expressed by Nadia Calvin That the QUIET Participate in the purchasing process Iberia for the operation to come to fruition, in this transaction “the only thing that counts” is what he says, and Hidalgo He is not in the business of selling his company.

According to information published by the Spanish media, Hidalgo assures that his company “is not going to share”, affirming that the indemnity paid by IAG by breaking up your previous agreement will help your company meet its short-term debt obligations.

Previously, the Government had shown its predisposition for the agreement to be carried out so that Air Europa could meet the debt it maintains with the QUIET, as well as for it to be created in Madrid an international hub that would compete with other European points such as Frankfurt and London.