Wednesday, December 6

IAG signs the best start to the year among the major European airlines

The actions of IAG they were revalued since January by 14.7 percent and signed the best start of the year among the large European airlines.

Engaged in the attack on the resistance of the 2 euros, which it has not yet been able to overcome, the parent company of Iberia surpassed its great rivals on the Old Continent.

A) Yes, Air France-KLM barely a rise in the stock market of 5.4 percent is noted, while Lufthansa, much more toned, does not exceed a gain of 13 percent.

Among low-cost airlines, only Easyjet is approaching IAG with a rebound of 14.5 percent. Conversely, Ryanair y Wizzair they were more off the hook, after advancing both 8 percent.

IAG leads the recovery

In just three weeks, investors have pinpointed the airlines that stand to benefit the most from a much more optimistic operating environment.

One of the most specialized investment banks in the sector, Free, said on Wednesday that airlines are on the road to recovery, assuming international travel restrictions continue to ease and omicron appears as “a brief but painful problem”.

Precisely, IAG it is the only flag carrier that these experts include among their preferred airlines, a group that also includes Easyjet and Ryanair.

According to the indicators developed by these experts, travel restrictions are already slowly being eliminated, after the initial impact of the omicron variant.

Beyond the restrictions, one of the great concerns for the sector is the rise in oil prices. At Liberum they acknowledge that fuel prices more than doubled last year, but are still within the commercial range. In the long term they do not see major impacts.

Your recommendation on IAG is ‘buy’, with a target price of 2.4 euros per share, which offers an upside potential of 23 percent.

Lufthansa, an expensive value

The situation is very different for Lufthansa, which Liberum has on a ‘sell’ note with downside potential of 23 percent. but you still have it Air France, where these analysts calculate a negative return of 50 percent, also with a ‘sell’ note.

There is a feeling in the market that Lufthansa, one of IAG’s great rivals in the European market, has already gone too far on the stock market.

Without going any further, another weighty investment bank, HSBC, recommended reducing investments in the German airline after considering that its shares are expensive.

“Lufthansa has made excellent progress refinancing state aid from the German government. However, we believe the stock has moved too fast,” economists at the British bank said.

Either Air France-KLM It came out especially in these first valuations of the year by investment banks. “He continues to consume cash and needs to strengthen his balance,” they explained in UBS.

In the opinion of these experts, the recovery of air traffic still lacks visibility during the winter, while the group will have to face structural problems related to the recovery of business travel in the coming years.

Air Europa as a catalyst

Another of the recently opened fronts at IAG is Air Europa. The Government, Iberia and Globalia they negotiate three ways to save an operation that for now has not had an impact on the market, although it comes with promising green shoots if it is finally closed.

“The uncertainty about the operation will remain open for several months,” said analysts at Sabadell Bank, after acknowledging that the possible agreement “makes strategic sense” for IAG.

Experts see sectoral concentration as an inevitable process that will help the largest groups, including the parent company Iberia, as they will have more power to set prices.

Technically, IAG a break was taken in the attack on the area of ​​round numbers of 2 euros, although the real resistance is between the range of 2.1-2.2 euros. Below, the area to maintain is 1.9 euros.