IAG share price forecast as the transatlantic route reopens

on Nov 7, 2021
  • The IAG share price popped after the company published its earnings.
  • The company expects to lose 3 billion pounds this year.
  • We explain what to expect as the transatlantic route reopens.

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The International Consolidated Airlines Group (LON: IAG) share price bounced back on Friday as investors reflected on the company’s earnings. The stock will be in the spotlight on Monday as investors cheer the resumption of the transatlantic route.

US to reopen borders with Europe

The US will end its ban on European travellers on Monday this week. This will be an important thing for IAG, which is the parent company of British Airways. While the company has seen strong growth in the past few months, this growth will likely accelerate in the coming months as the London to US route reopens. 

Before Covid, British Airways made most of its money between the US and the UK. This is because the company had about 6 scheduled trips between Heathrow and John F Kennedy per day. The route brought in revenue of more than $1 billion per year.

The reopening will come two days after the IAG share price rose after the company’s earnings. The company said that it will lose another 3 billion pounds this year. However, analysts believe that these losses will be temporary as the transatlantic route will offset these losses. 

The company expects to increase its flight schedules by about 60% of normal levels. This will be a bit higher than the current 40%.

Still, the reopening of the UK and US route does not necessarily mean that the IAG share price will do well. For one, the price action has already been priced in by investors. 

Also, British Airways will faces stiff competition from European rivals like KLM and Virgin Atlantic. Many American carriers are also waiting on the sidelines. At the same time, Europe is seeing more Covid cases, which means that the industry could take time to catch up. In addition, the firm faces significant margin issues as oil prices soar.

IAG share price forecast

IAG share price

The daily chart shows that the IAG share price has been in a bullish trend in the past few weeks. This trend is mostly because of the anticipation of American flights. 

While this trend is a good thing, it remains below the descending trendline that is shown in black. The stock is also slightly above the 25-day and 50-day moving averages. Therefore, the stock will remain under pressure as long as it is below the descending trendline.


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