IAG to report on Friday

International Consolidated Airlines Group (IAG) will report its first-quarter results for 2014 on Friday. The consensus is for earnings per share of 31.3p and revenue of £16.24 billion.

In 2013 IAG returned to profit, swinging from a loss of £18.6 million in 2012 to a profit of £623 million last year. British Airways was the driving force behind the company’s rebound to profit, while its sister airline Iberia, reported a loss of £134 million. Despite this, there is ‘huge progress’ with regards to cost control and restructuring.

IAG chief executive officer Willie Walsh stated that he hoped to post a £1.45 billion operating profit by 2015. I suspect the Spanish air carrier will be the biggest obstacle to achieving his target.

The restructuring at Iberia will involve reducing staff, cutting underperforming routes and eventually focusing on its Latin American business which initially sparked the merger.

The share price has been under pressure since tensions between Ukraine and Russia rose in early March, which subsequently saw oil driven higher. The share price is finding support at the 200-day moving average of 377p, and positive results could provide a buying opportunity. If the results exceed expectations we could retest the 440p level.

IAG chart

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