Wednesday, January 19

Ómicron and the bassists beat IAG

IAG shares once again led the losses in the Spanish stock market due to the uncertainty generated by the omicron variant in the tourism sector and the new wave of pressure from bearish investors.

The 9 percent losses that IAG accumulated in the year are nothing more than a reflection of the uncertain scenario that the virus opened, and that forced airlines to cancel more than 150,000 flights.

The variant omicron is 4.2 times more transmissible than the delta strainaccording to a study by the Japanese Ministry of Health, although it also appears to cause milder symptoms.

In Europe, the current “problem” is posed by the high increase in “positives” that the delta variant is causing and the “fear” of the various governments of a future spread of omicron in the region, said Link Securities analysts.

For this reason, many governments, including that of the UK, Denmark or France, again announced restrictions on mobility, which increases the pressure on the tourism sector.

The tourism sector, low minimums

Specifically, the tourism sector “is affected by the news from Japan that omicron is more contagious,” corroborate IG analysts.

In addition, the United Kingdom has implemented teleworking to stop the expansion of the new variant, another negative news for the entire sector

“The market is discounting it as a negative factor for mobility that can affect consumption and tourism, at least in the short term,” said the sources consulted.

In fact, as previously explained by, the problems for IAG and for all airlines will become entrenched until 2024 due to the new scenario opened up by the virus.

The reaction of the sector was immediate. IATA Director General and former IAG CEO Willie Walsh said the flight restrictions “are nonsense” when variants of the virus are already in a country.

In addition, he added that “they are causing tremendous damage to airlines, tourism and economies.” For this reason, the airline employers trusted that the governments will review the new restrictions soon.

Bears pressure IAG

The truth is that the financial impact that the new variant will cause in the airline industry is not clear. But the more than 150,000 canceled flights are not a particularly encouraging sign.

With the sector’s financial visibility again clouded, the bears rushed to take positions against IAG.

The latest to arrive was Blackrock, which went short 0.51 percent of IAG shares, carrying 25.3 million shares.

At least four investors revealed bearish positions against Iberia’s parent. Specifically, Citadel has 0.93 percent, the largest short position, with 46.1 million shares.

In addition, Pictet Funds unveiled a bearish load on IAG of 30.7 million shares, equivalent to 0.62 percent of equity, while Kinbury Capital went short at 0.67 percent.

IAG’s return to profits could be delayed

In total, short funds hold bearish positions of 2.73 percent of IAG’s outstanding shares.

IAG was expected to return to profits in 2023. Now, with the new variants, “if tourism slows down, that return to profits could be delayed and another capital increase could even be necessary,” IG analysts said to explain the return of the bears.

With the falls on Thursday, IAG shares are once again trading at the edge of 1.6 euros, a stock exchange lifesaver that acted as support but is now under pressure again.

According to IG analysts, there is now “a lot of uncertainty in the value, which could continue to fall.”

If this is the case, these experts marked the next support to take into account at 1,484 euros and pointed out that “any rebound that IAG has could be used to get out if it is inside, since the prospects of your business worsen with the new variant”.