Wednesday, May 18

IAG reorganizes bullish comeback after British Airways credit

IAG reorganized the bullish comeback after stabilizing its price at around 1.9 euros. At the gates of the presentation of results, the value withstood the pressure while green shoots arrive, such as the 1.18 billion euro loan signed by British Airways.

Rising oil prices and the new delta plus variant of the coronavirus brought downward pressure on IAG to highs, but the value held up well at the 1.8 euro support.

The market expects the company to present losses this Friday of around 2,700 million euros. The list of brokers afflicted with the group does not stop growing.

Entities like JP Morgan, Peel Hunt o Berenberg They recently issued negative recommendations on the group in light of the challenges that will come in the coming quarters.

Analysts value IAG’s credit

In this context, the credit accessed by British Airways has a “positive” impact, because it will allow the airline obtain financing in a “simple, flexible and low-cost” waysaid PIlar Aranda, an analyst at Bankinter.

Although IAG entered the pandemic with one of the healthiest balance sheets in the sector, the truth is that the crisis triggered its debt. To strengthen the balance sheet, the group issued convertible bonds and senior debt, but ruled out a new capital increase outright.

In fact, the company was already able to close the first half of the year with equity of 914 million euros. Together with the reactivation of activity, it is a factor that “favors the stabilization of the debt,” said Aranda.

British Airways in the spotlight

IAG’s liquidity and debt levels are one of the key variables on which the market focused after the outbreak of the pandemic.

The relief that the group could experience following the end of the traffic restrictions in the United States, could be overshadowed by the increase in coronavirus cases, fuel prices and higher airfares at Heathrow, which would directly affect British Airways .

“The impediments to the recovery of British Airways could make necessary cost cuts”, which would force to allocate more resources to reinforce the balance, they explained to Bloomberg Intelligence analysts.

IAG’s net worth will close 2021 in positive

All in all, the central scenario calculated by Aranda is that IAG closes this year with positive net worth. “If Leases are excluded, it would have a very low net debt and net cash in 2020,” this expert calculated.

One of the main risks is that this variable is negative, a scenario in which the company could recapitalize due to the high liquidity it has, said Aranda. According to its own calculations, the group’s cash will amount to 7,700 million euros this year.

IAG is precisely one of Bankinter’s preferred airlines in the airline sector, along with Ryanair. In the bank they reiterated their recommendation to bet only on healthy and leading values.

IAG reorganizes its bullish comeback

After stabilizing the falls, the analysts consulted by explained that for IAG it is important to recover the psychological level of 2 euros, which is practically within reach.

From this level of round numbers the stock could gain enough momentum to attack the next resistance, at 2.2 euros. On the last few occasions that IAG faced these levels, downward pressure emerged strongly.

In fact, the price has been trying to overcome this level since July, which would be the gateway to the year’s highs of 2.53 euros.

So far this year, IAG shares have risen by just 8 percent on the IBEX 35. But the consensus of analysts at estimates a potential increase of more than 31 percent for the Iberia parent company.