Bad news for IAG share price: What next?

International Consolidated Airline (LON: IAG) share price has held steady in the past few days even as the company faces more challenges than its rivals. The stock was trading at 172p on Monday, a few points below this month’s high of 176p.

British Airways and Aer Lingus news

IAG, the parent company of British Airways, Aer Lingus, and Vueling, has made several negative headlines in the past few days and it is unclear how they will impact its business. 

Aer Lingus has announced more cancellations between July 11th and July 14th because of the ongoing strikes. In a statement last week, the company said that it would cut 80 more flights, which will affect its revenues. 

This is in line with a strike by staff represented by the Irish Air Line Pilots’ Association union. These strikes will see other companies like EasyJet and Wizz Air take market share in key routes.

The other important negative news is from British Airways, its biggest franchise. The most recent data showed that its flight cancellations have been more than other companies in the indistry. 

It cancelled 4,033 flights from UK airports over the past year. That number is almost double that of other companies like easyJet, a move that expert attribute to its cost-cutting measures. 

Other data shows that complaints by customers to the main regulator rose by 10% in the first quarter of the year. Therefore, there is a likelihood that the company could face a fine if these cancellations continue. 

To be fair: IAG has pledged to work on these issues and is spending £7 billion in the next three years to boost its operations. Also, IAG is not the only major airline that is struggling because of cost cuts. 

In the United States, Southwest Airlines, which has long been seen as a great low-cost carrier, has lost over 30% of its value since 2023. This happened after its technology broke down in 2023 leading to substantial delays.

IAG financials are doing well

Despite its challenges, IAG’s operations are doing well. The company’s revenue rose from €5.88 billion in 2023 to over €6.4 billion in the first quarter while its net loss narrowed from €87 million to €5 million. 

The company has also continued to slash its total debt, helped by its strong profits and cash performance during the last quarters. 

Still, the company faces more challenges, especially its fuel costs are expected to remain at an elevated level this year. Brent, the international benchmark, has risen to over $85. Data by IATA shows that average jet fuel price rosr by 1.4% to $104.38/bbl, up from $99.85 in May. Jet fuel is a major cost for airlines like British Airways, Aer Lingus, and Vueling.  

IAG share price forecast

IAG chart by TradingView

The daily chart reveals that the IAG stock pruce has wavered in the past few weeks. After peaking at 187.50p in May, it has retreated by about 8% to the current 173.60p. Its current price is important since it was its highest point in February and August last year.

The stock has risen above the 50-day and 100-day Exponential Moving Averages (EMA), meaning that bulls are in control. It remains above the ascending trendline that connects the lowest points since March last year. 

Therefore, the stock will likely remain in this range as traders wait for the next earnings, which are set for August 2nd. The next key levels to watch will be at 160p and 180p. A move above this month’s high of 176 will lead to more gains.