Coronavirus crash: IAG share price marches lower amid flight cancellations

Over the last eight trading sessions, shares in IAG have fallen by more than 25% as the coronavirus outbreak worsens, forcing UK airlines to cancel flights across Europe.

International Consolidated Airlines Group (IAG) shares have fallen by more than a quarter over the last eight trading sessions – wiping off over £15 billion in value from the stock – as the COVID-19 outbreak worsens, forcing UK airlines to cancel flights.

In fact, the British Airways-owner and its rival Ryanair said that it will cancel hundreds of flights, particularly Italian short-haul trips throughout March and April, due to the coronavirus impacting consumer demand.

IAG is trading at 455p a share as of 13:10 (GMT) on Tuesday.

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Berenberg lowers IAG target price amid COVID-19 outbreak

Analysts from Berenberg reiterated their ‘buy’ rating for IAG but opted to lower their target price for the stock from £7 to £6.20 a share due to concerns over the coronavirus threat and its impact on the travel industry.

‘Management noted that Asia Pacific demand appears to be slowly stabilising. IAG has redeployed some capacity elsewhere but it is cautious about making deeper cuts,’ Berenberg said in a note.

‘More immediately, near-term Europe bookings have weakened quickly and unevenly,’ analysts from the Hamburg-based bank added. ‘Italy has destabilised as both corporate and leisure customers cancel trips. However, other markets were holding up at the time of Friday's Q4 release, including Tenerife, the site of a high-profile coronavirus outbreak.’

However, analysts from the German bank still think IAG is capable of generating ‘sustainable outer-year returns above its peers’ based on its M&A activities and an ‘opportunistic 737 MAX fleet renewal’.

Based on the stock trading at 455p a share, analysts from Berenberg believe the stock has a potential upside of 36%.

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