IAG share price flies lower as group flags lower free cash flow this year

Shares in British Airways and Iberia parent International Consolidated Airlines Group (LON:IAG) have fallen deep into the red in today’s session as the company flagged lower free cash flow this year. The comment followed the blue-chip group’s full-year results last week when the company, which also owns Aer Lingus, and low-cost carriers Vueling and Level, unveiled higher revenue and said that it would pay out a special dividend to shareholders.

As of 12:41 GMT, IAG’s share price had lost 4.01 percent to stand at 578.80p. The shares are underperforming the broader UK market, with the benchmark FTSE 100 index currently 0.78 percent better off at 7,162.45 points, benefitting from optimism over a potential deal between the US and China.

IAG flags lower FCF

Reuters reported today that IAG had issued a clarification today to say that its free cash flow in the current year would be lower than last year. The British Airways owner explained that it had clarified its commentary around free cash flow, saying that it would be lower in 2019 as it was increasing capex against a forecast of flat operating profit.

The newswire further quoted Broker Goodbody as explaining that there had been confusion during a call with analysts last week following the FTSE 100 group’s full-year results, due in part to the adoption of new accounting standards.

Analyst ratings update

Barclays, which is bullish on IAG with a ‘buy’ rating, set a price target of 700p on the company on Friday, while HSBC, which sees the British Airways parent as a ‘reduce,’ boosted its valuation on the shares from 525p to 550p. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average price target of 702.87p.

As of 13:02 GMT, Monday, 04 March, International Consolidated Airlines Grp share price is 578.80p.