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
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
React to global volatility
Market volatility continues as coronavirus concerns amplify. Trade with IG and 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 only incur a fee when triggered
- Round-the-clock assistance – our highly skilled team are available when you need support
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.