IAG’s full-year figures set to jump

Increasing passenger numbers and falling costs look set to help IAG post better full-year figures.

A British Airways plane
Source: Bloomberg

On Friday 27 February International Consolidated Airlines is due to post its full-year figures. Expectations are for the adjusted earnings per share to increase from £0.193 up to £0.362. Sales are also called to improve, rising from £18.675 billion up to £20.028. The increases will, however, be dwarfed by the company’s rising pre-tax profits that are forecast to jump from £227 million up to £1.107 billion.

Institutional support for the company has steadily improved over the last couple of years as CEO Willie Walsh has increasingly gotten a handle on the overspending at Iberia, and improved market share for both the Spanish airline and British Airways.

At present, 21 institutions have a buy rating for the company, with four calling it a hold and only two a sell. The average twelve-month target price for the company is 573p, above the current trading price around the 560p level.

As well as digesting the latest figures, the markets are also closely monitoring the development of IAG’s efforts to acquire Aer Lingus. IAG’s CEO Willie Walsh, having previously run the Irish airline, has targeted this acquisition as a means to broaden the group’s exposure and improve its capacity at important hubs like London.

At present, the Irish government holds a 25% stake in the airline and Ryanair also holds a 28.5% stake. The Irish government is looking for a longer-term commitment than the five-year proposal to maintain the airline’s current service to the country. Ryanair has just spent the last nine years fighting court cases of rulings from the UK’s Competition Commission.

On Friday 30 January shares jumped on the news that Qatar Airways had acquired a 9.99% stake in the group. Subsequent statements confirmed that this would lead to a greater partnership between the airlines, and might see further investment but not a total takeover. With this support shares in IAG will be well supported, and any retracement closer to the moving averages could be viewed as a buying opportunity by investors.

IGA, may distribute information/research produced by its respective foreign marketing partners 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.

This information/research prepared by IGA or IGA Group is intended for general circulation. 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 or 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. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.