Can IAG shares surge 44% in the coming months?

Shares of IAG, which owns British Airways and Aer Lingus, could hit 230.42 pence, according to analysts’ average price target.

IAG stock price gains slightly

International Consolidated Airlines Group SA, also known as IAG, saw its shares advance 1% to finish at 160.46 pence on Monday.

Year-to-date, the Anglo-Spanish airline holding company’s stock is up 7.1%, although it has gradually declined from the highs of around 217.60 pence per share in March.

As of Monday, sentiment was largely positive on IAG shares, with 20 analysts giving ‘buy’ calls, seven recommending ‘hold’, and one ‘sell’ rating, Bloomberg data showed.

The research teams’ average 12-month target price stood at 230.42 pence, implying a potential upside of about 44% based on Monday’s close.

British Airways and Aer Lingus restore more flights

Bloomberg Intelligence (BI) recently wrote that IAG’s weak long-haul outlook poses a challenge, especially as uncertain winter prospects suggest European airlines ‘may have to keep their focus on cost control, despite summer’s green shoots of a domestic-led sales recovery’.

British Airways last Friday resumed the operation of its seasonal service linking Slovenia’s capital Ljubljana to London’s Heathrow airport after nearly two years. Fraport Slovenija, the biggest airport serving Ljubljana, said British Airways will run four weekly flights until 29 October 2021.

British Airways has also restored its Singapore flight connections with Jetstar Asia at the city-state’s Changi Airport. The UK flag carrier is one of three European airlines that have agreements with Jetstar, allowing their passengers to transit in Singapore to or from nominated cities in the latter’s network.

Meanwhile, IAG’s Aer Lingus resumed flying on the Dublin-Washington route earlier this month. The airline is thus flying to four US cities now, versus the 15 cities in North America it was servicing before the pandemic.

Ireland’s RTÉ news channel reported that restrictions on travel between the US and Europe could be eased in early September, and Aer Lingus ‘is in a good position, with unit costs much lower than competitors on transatlantic routes’.

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WIll IAG be allowed to purchase Spanish airline Air Europa?

IAG, the biggest provider of scheduled passenger air-transport services in Spain, had proposed to acquire Air Europa, the third largest airline in that market. The European Commission in June started investigating the deal.

Last Friday, BI analysts wrote that IAG’s bid for Air Europa remained likely to obtain antitrust approval, despite the European Union’s in-depth probe and the deadline extension. However, it will likely be required to sell some routes and slots, BI opined.

‘The delayed merger filing will enable the EU to conduct an analysis with a more reliable air-traffic recovery scenario, which could benefit both companies,’ BI added.

Both firms compete head-to-head for passenger air-transport services in Spain. The European Commission was concerned that the proposed acquisition could ‘significantly reduce competition on 70 origin and destination city pairs within and to/from Spain’.

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