Why International Consolidated Airlines Group’s Stock Traded In Red Lately?

  • Apr 24, 2019 BST
  • Team Kalkine
Why International Consolidated Airlines Group’s Stock Traded In Red Lately?
IAG is the world’s largest airline group headquartered in London, United Kingdom. In terms of revenue, IAG is Europe’s third and the world’s sixth largest aviation company. The group has 573 aircraft carrying around 113 million passengers to 268 destinations each year. IAG is a market leader in three European countries i.e., Ireland, UK and Spain which enables them to gain the majority of share in the aviation market. In 2017, the company launched a low-cost airline brand called LEVEL, which flies from Paris, Barcelona and Vienna. In 2018, revenue increased by 6.7 per cent, due to the steady growth of both passenger revenue and cargo revenue. The company’s reported fuel, oil costs & emissions charges had increased by 14.6 per cent due to higher fuel prices but were marginally offset by weaker USD and management efficiencies. The company’s adjusted earnings per share had increased to €117.7 cents, due to strong operating profit with higher unit revenues and lower non-fuel costs. The company’s share price went down, driven by the increase in the Brent crude oil prices on 23rd April 2019 against the previous five-month price. As the US President announced the end of waivers from US sanctions granted to India, China, Japan, South Korea and Turkey, and some of Iran’s largest customers; the news sent shares in some of the world’s biggest energy companies higher. The US is now demanding that countries no longer import any oil from Iran. The international oil benchmark, Brent crude oil, surged by 0.8 per cent to $74.64 a barrel. The US market, West Texas Intermediate, rose by 0.7 per cent to $66.02. The major European oil companies have boosted from this news. Due to an increase in oil prices, stocks in major airlines, which are particularly sensitive to fluctuating fuel prices, suffered. EasyJet fell by 4.2 per cent, while British Airways parent company IAG decreased by 3.8 per cent. Ryanair decreased by 4.6 per cent. On 23rd April 2019, all the airline companies had the worst day since December 2018. Share Price Performance Daily price chart (as on April 24, 2019), before the market close. (Source: Thomson Reuters) At the time of writing (as on April 24, 2019, at 2:30 PM GMT), shares of the IAG were quoting at GBX 535.80 and decreased by 0.594% against its previous day close price. In past one-year, shares of IAG have registered a 52w high of GBX 727 and a 52w low of GBX 499 and at the current market price, as quoted in the price chart, shares were trading 26.30 per cent below the 52w high price level and 7.37 per cent above the 52w low price level. On a yearly basis, stocks of IAG have delivered a negative return of 12.81%, and on a year-to-date basis, shares were down by 12.78%. From a simple moving average (SMA) standpoint, shares were trading marginally above its 30-day, but shares were trading considerably below its 60-day and 200-day simple moving average price, which is a bearish technical indicator. From the volume standpoint, the 5-day average daily volume traded on the London Stock Exchange were 5.99% down than its 30-day average daily volume traded on LSE. Total outstanding market capitalization was around GBP 10.60 billion with a dividend yield of 6.86 per cent. The company has increased capacity in all the airlines and regions excluding Asia-Pacific. Political uncertainty and fuel price volatility are the major risks that can impact the performance of the business group. The company is impacted by the Brexit and will evaluate and prepare for the changes. In 2018, the company had shown good financial performance as compared to the last year. The company’s rental revenue has also increased primarily at John F Kennedy airport.

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