IAG share price soars as UBS flags clearer skies for airlines

Shares in British Airways parent International Consolidated Airlines Group (LON:IAG) have rallied in today’s session, as analysts at UBS flagged clearer skies for European airlines, which are expected to benefit from reduced political uncertainty. In as separate development, IAG’s boss Willie Walsh warned the UK government to keep down the cost of building any new runway at Heathrow or Gatwick.

As of 13:32 BST, IAG’s share price had surged 4.02 percent to stand at 530.00p, outperforming the broader market rally, which has seen the blue-chip FTSE 100 index add 1.22 percent to 6,337.38 points amid hopes that the UK will vote to remain the UK. The group’s shares have gained nearly one percent over the past year, but are down by about 13 percent in the year-to-date.
Analysts at UBS continue to be bullish on IAG with a ‘buy’ rating, noting today that a break in the clouds of political uncertainty might allow shares in European carriers to recover some of the year-to-date drop.

“We also think that political uncertainty has added to concerns and this overhang will reduce in the coming weeks,” the bank’s analyst Jarrod Castle was quoted as saying in a research note sent to clients. “Perhaps investors will find a renewed appetite for the airline space.”
Castle added that given the compression in valuation multiples as a result of the potential risks surrounding the referendum, he saw upside potential to share prices going into the second quarter results reporting season in July.
In other news, Reuters reported that IAG’s chief executive Willie Walsh had warned the government to keep down the cost of building any new runway at Heathrow or Gatwick or British Airways would opt to expand elsewhere. Walsh noted that the government should consider changes to Heathrow’s £18-billion expansion plan because the cost could lead to high charges for passengers, damaging the airport’s ability to provide strong UK flight connections.
As of 13:57 BST, Thursday, 23 June, International Consolidated Airlines Grp share price is 531.25p.