Is it safe to buy the IAG share price dip?

on Oct 28, 2022
  • IAG share price retreated slightly as concerns about the aviation sector.
  • The company has moved back to profitability in Q3.
  • IAG had an operating profit of more than €1.2 billion.

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IAG (LON: IAG) share price pulled back on Friday after the company published its quarterly results. The stock dropped to a low of 106p, which was the lowest level since October 13 of this year. It remains about 28% above the lowest level this month, making it a top FTSE 100 performer.

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British Airways parent results

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International Consolidated Airlines Group, the parent company of British Airways and Iberia published mixed Q3 results. The firm’s operating profit for the quarter surged to more than €1.2 billion, higher than the operating loss €452 million it made in the same period last year. Operating profit jumped to over €770 million while its profit after tax came in at €199 million.

IAG has staged a strong turnaround, helped by the rising demand for business and leisure travel. It has managed to become profitable after making record losses during the Covid-19 pandemic. In addition, it has boosted its balance sheet by increasing its cash on hand to €9.2 billion and its liquidity to €13.48 billion.

Higher prices have helped the company handle the current challenges. Indeed, its total revenue of €7.3 billion was higher than what it made in the same quarter in 2019 even as it carried fewer people. Notably, its revenue rose despite high flight cancellations and restrictions at Heathrow Airport. In a statement, the firm’s CEO said:

“As we build back our operational resilience, we are confident in our strengths as a Group: first, a portfolio of leading airline brands; second, leading positions in our key markets and hubs; and third, the flexibility afforded by IAG to drive operational efficiency and innovation.”

Therefore, there is a likelihood that the IAG share price will continue doing well in the coming months as the transport and tourism sector rebound. The same is true for other aviation companies like EasyJet and Wizz Air, as I wrote in this article.

IAG share price forecast

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iag share price

The four-hour chart shows that the IAG stock price made a break and retest pattern after earnings. It did that by retesting the upper side of the descending channel shown in green. The stock remains above the short and longer-term moving averages while the Relative Strength Index (RSI) has tilted downwards.

The stock will likely keep rising as bulls target the next key resistance level at 137p, which was the highest level on May 13th.


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