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IAG shares set to increase as aviation eyes up a new normal

IAG share price has taken off thanks to news that Covid-19 vaccines are almost ready to be rolled out. With hope of normality returning, IAG shares are responding, so are we entering a new normal for the aviation industry?

IAG Source: Bloomberg

Like many in aviation, International Consolidated Airlines Group (LSE: IAG) has endured a torrid year. Travel restrictions have caused their revenue and share price to come crashing down. However, over the last three weeks, the IAG share price chart has performed something of a U-turn.

News that Covid-19 vaccines may unlock travel restrictions and get people flying again has resulted in IAG shares rising by 85% in November and the bull period isn’t over yet. Although prices peaked at a monthly high on 24 November (176.60p), a dip at the start of play on 25 November is now being reversed. In tandem with vaccine euphoria, investors are hopeful IAG’s British Airways (BA) can resume restriction-free transatlantic travel in time for the festive season.

Shares in IAG are up but still down

Although it may not be fully implemented in time for Christmas, BA is trialling a system that tests people 72 hours before their trip, during, and upon their return. The service will be carried out on 500 fliers and, if successful, it could end the 14-day quarantine mandated by the UK government. Indeed, with Heathrow also offering a testing service, BA and the industry, in general, is moving in the right direction.

What can’t be overlooked, however, is the fact revenue is down significantly in 2020. The IAG share price chart shows a trading high of 270.31p this time last year. Today, shares are closer to 170.60p. We already know that vaccinating everyone will take time. Then there’s the political issue of compulsory vaccinations. The Czech Republic has said vaccines could be linked to a 'travel passport' that gives people freer movement across Europe. Other countries may consider a similar system. Those interested in buying or trading IAG shares can’t ignore these broader issues.[CO1]

IAG share price charts could reflect a new normal

The BA sell-off also demonstrates a turning of the tide. Although changing waters don’t typically affect planes, they do in this instance. By selling off items down to cutlery and champagne glasses, BA isn’t simply trying to recoup some of the £5.1 billion it’s lost this year.

The sell-off is a sign that times are changing. BA is trimming away the fat, scaling back, and turning into a lighter operation. To coin a phrase, it’s preparing for a 'new normal' within the aviation industry. What we knew before may never return in the same form. That doesn’t mean prosperity won’t return to the industry at large. However, the shake-up from Covid-19 has been so great that what settles probably won’t be the same as it was before.

Do you have a view on where the IAG share price may head next?

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