IAG share price faces turbulence as costs headwinds rise

October 31, 2023 09:00 PM PDT | By Invezz

IAG share price faces turbulence as costs headwinds rise — Image source: Invezz

IAG’s strong performance but headwinds remain

IAG, the parent company of British Airways and Aer Lingus, published strong financial results last week. The company’s total revenue rose from €16.6 billion in the nine months to September in 2022 to over €22.2 billion. Its revenue rose to over €8.6 billion in the third quarter, up from the previous €7.3 billion.

Its profits also jumped in the same period. The company’s profit after tax jumped to € 2.1 billion in the nine months and €1.23 billion in Q3. Its profits in the same period in 2022 came in at €199 million and €853 million. Further, the company’s debt narrowed from €19.9 billion to €17.2 billion.

IAG’s key brands did well in the quarter. Aer Lingus revenue jumped by 16% while British Airways rose by 20%. British Airway’s profits soared to over 617 million pounds. Similarly, Vueling’s total operating profits jumped to over 282 million euros.

Still, IAG share price has not reacted positively to these metrics. For one, there are signs that the business is slowing while costs are rising. As I warned before its earnings, there are concerns about jet fuel.

Data by IATA shows that the average jet fuel price stood at $937.80 per ton. There are signs that prices will continue rising in the coming months. In a statement on Thursday, the World Bank warned that Brent could surge to over $150 per barrel if the war between Israel and Hamas intensifies.

Jet fuel is a major cost for airlines. Wages are other costs and there are signs that they are rising. British Airways is still negotiating with pilots and cabin crew about higher wages. This means that the company’s margins will continue thinning.

IAG share price forecast

IAG chart by TradingView

The daily chart shows that the International Consolidated Airline (IAG) stock price has come under pressure in the past few months. It formed a double-top pattern at 173.60p. In price action analysis, this pattern is usually one of the most bearish signs.

The stock remains below the 50-day and 100-day Arnaud Legoux Moving Averages (ALMA) Also, it has moved slightly above the 38.2% Fibonacci Retracement level. Therefore, the outlook for the stock is bearish, with the next level to watch will be the support at 127.95p, the lowest level on March 20th.

The post IAG share price faces turbulence as costs headwinds rise appeared first on Invezz

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