How long will the easyJet and IAG shares stay grounded?
British Prime Minister Boris Johnson is expected to deliver a ‘roadmap’ for easing lockdown restrictions, but with travel bans to remain in place for some time the airline industry will remain grounded for the foreseeable future.
Later this week, British Prime Minister Boris Johnson is expected to unveil his ‘roadmap’ to easing lockdown restrictions, but with travel bans to remain in place for the time being, the airline industry will remain grounded for the foreseeable future.
International Consolidated Airlines Group (IAG) said that it plans to cut as many as 12,000 jobs at British Airways due to the prolonged economic fallout from the Covid-19 crisis.
Earlier this week, easyJet told hopeful travellers that the company could return to the skies as early as June, though the low-cost airline noted that ‘there is still a great deal of uncertainty about when Europe will start opening up again’.
‘We are working closely with local authorities and the relevant regulators to monitor the situation across Europe so that we remain informed of when restrictions could change and when flying can resume,’ easyJet said in a statement.
‘We anticipate this will be a minimal schedule at first, which will vary by country.’
Covid-19 weighs heavily on IAG and easyJet share prices
The coronavirus pandemic has brought the global economy to a grinding halt, with members of the airline industry bearing the brunt of crisis.
Since the start of the year, IAG and easyJet have seen their share prices fall more than 62%, with analysts constantly downgrading their forward-looking assessments for both airlines.
Goldman Sachs downgraded its rating for IAG from ‘buy’ to ‘neutral’ in May and lowered its target price for the stock to 250p, implying potential upside of 24%.
IAG is trading at 201p per share as of 14:25 (GMT) on Tuesday.
Analysts took an even dimmer view of easyJet’s prospects for 2020, with Morgan Stanley, Goodbody and Mainfirst all downgrading the stock in April.
Morgan Stanley remains the most optimistic about easyJet’s share price trajectory, with the US-based investment bank settling with a target price of 800p for the stock.
However, analysts from Mainfirst were particularly downbeat about the low-cost airline, lowing its price target to 450p, implying the stock has a potential downside of -16%.
easyJet is trading at 538p per share at the time of publication.
How to trade stocks with IG
Create an IG trading account or log in to your existing account
Enter ‘easyJet’ in the search bar and select it
Choose your position size
Click on ‘buy’ or ‘sell’ in the deal ticket
Confirm the trade
The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.
React to global volatility
Market volatility continues as coronavirus dominates the global agenda. Trade with us to take advantage of:
- Tight spreads – from just 1 point on major indices, and 2.8 on US crude
- Guaranteed stops – they’re free to use, and you’ll only pay a small fee if they’re triggered
- Round-the-clock assistance – our highly skilled teams are available when you need support
Live prices on most popular markets
You might be interested in…
Find out what charges your trades could incur with our transparent fee structure.
Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.
Stay on top of upcoming market-moving events with our customisable economic calendar.