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.

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