IAG shares tumble 8% even as Q2 loss shrinks

Summary

  • International Consolidated Airlines Group shares fell nearly 8%
  • Passenger capacity was nearly 21.9% of total passengers carried in Q2 2019
  • The operating loss narrowed to €967m in Q2 2021 as against €2,182m

Shares of International Consolidated Airlines Group SA (LON: IAG), the London-headquartered aviation giant, fell approximately 8% in the pre-afternoon deals on Friday, 30 July, even as the group’s quarterly loss tapered in the April-June period.

The stock cracked more than 2% in the opening deals to start at GBX 176.90 from the previous closing price of GBX 181.64.

The airline had a passenger capacity equivalent to 21.9% of the total passengers lifted during the same period of 2019 as international travel continued to be affected by the developments surrounding the rising cases of Covid-19 in various geographies across the world. The consumers’ reluctance with regard to international travel remained with the extant requirement of self-isolation and other pandemic-laden restrictions in many countries.

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Following the development, the stock of IAG slipped as much as 7.84% to an intraday bottom of GBX 167.40 apiece. According to the data available with the London Stock Exchange, the shares fell 12% in the April-June period.

In the third quarter of the present calendar year, the air carrier is looking forward to boosting the passenger capacity to nearly 45% of what was seen during the corresponding period of 2019. However, the heightened uncertainty around the resurgence of Covid cases can derail the plans of augmenting the passenger capacity. IAG operated as many as 1,371 cargo-only flights in Q2, slightly higher than 1,306 flights in the first quarter.

Continuing the recovery from the Covid slump, IAG reported an operating loss of €967 million in the second quarter as compared to an operating loss of €2,182 million in the similar quarter a year earlier. For the first half of the current year, the company recognised an operating loss of €2,035 million, down from €4,052 million in H1 2020.

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IAG stands with a cash of €7.7 billion at the end of 30 June 2021, €1.7 billion higher as compared to the cash held at 31 December 2020.

The airline and aviation companies have been the worst hit following the aftermath of the coronavirus pandemic. The business profitability has severely disrupted as consumers still feel anxious before stepping a flight for international travel. The stock of IAG collapsed 69% in the one-and-half period between 14 February and 3 April of 2020.

Last year has been the most disturbing 12-month stretch for airlines companies as travel remained largely disrupted due to the evolving nature of Covid-19.

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