IAG share price has remained under pressure in the past few weeks as investors focused on transatlantic travel amid the ongoing trade tensions between the US and China. It was trading at 328p on Monday, a few points below the year-to-date high of 340p. It remains 55% above its lowest point in April.
British Airways parent seeing more demand
IAG, the parent company of top airlines like British Airways, Iberia, and Aer Lingus, has been in the spotlight since the trade war between the US and European countries started earlier this year.
Like other airlines, the company said that it saw some softness in leisure and business travel as demand slowed. Business travel slowed as companies adjusted to the new normal and their budgets.
In a statement on Monday, the company said that the weaker demand on transatlantic routes was showing signs of easing in the past three weeks. The statement came from Luis Gallego, the CEO, who was speaking to Bloomberg.
This statement means that the company is seeing more bookings in its most profitable route, which may help it boost its numbers as the summer season starts.
The trade issue remains being volatile. While the US has reached a deal with the United Kingdom, there is a risk that relations with the European Union will get worse.
Trump recently threatened to impose a 50% tariff on European goods, noting that talks were not moving as fast as expected. He backed down after talking with Ursula von de Leyen, the European Union president.
Still, there is a likelihood that the two sides will not have an agreement by the July deadline. That’s because the US has some unreasonable demands, including the end of the value added tax (VAT), which it sees as being discriminatory to the US.
IAG financial results
The most recent results showed that the company’s numbers continued doing well in the first half of the year. Revenue rose by 9.6%, while operating profit rose by €130 million to €198 million.
Its revenue rose to €7.04 billion, while its profit for the period surged to €176 million. It also has one of the best balance sheets as its cash, cash equivalents, and interest-bearing deposits jumped to €9.35 billion.
Most importantly, the company has worked to boost its balance sheet by reducing its debt. Its borrowings improved to €15 billion from €17.3 billion.
The strong balance sheet has helped IAG make a big order from Boeing and Airbus to grow its network.
IAG share price analysis
The daily chart shows that the IAG stock price bottomed at 210p on April 7, and then bounced back to a high of 340p in May. It has formed a bullish flag pattern, comprising of a vertical line and a rectangle formation.
The 50-day and 100-day Exponential Moving Averages (EMA) have made a bullish crossover pattern, a highly bullish sign.
Therefore, the most likely scenario is where the stock bounces back, and possibly hits the important resistance level at 368p, the highest point this year. Such a move would signal a 10% surge above the current level.
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