IAG share price is firing on all cylinders: any more upside?

The IAG share price has been in a strong trajectory this year, moving to its highest level since March 2020. Most recently, the stock has risen in the last six consecutive weeks, making it one of the best-performing companies in London. It has risen by over 220% from its lowest point in 2022. 

IAG business is booming

IAG, the parent company of firms like British Airways, Iberia, LEVEL, and Aer Lingus, is doing well this year. It has become the second-best-performing company in the aviation industry after United Airlines. 

This growth mirrors that of other airlines. United Air Lines stock has jumped by over 150% this year, while Qantas and Delta Air Lines are up by double digits this year.

The stock surged after its business continued to fire on all cylinders as evidenced by the rising load factor. 

IAG’s business is doing well. The most recent financial results showed that its revenue rose to €24 billion in the first nine months of the year. That was big increase from the €22.2 billion a year earlier.

IAG’s profit after tax continued doing well, rising to €2.3 billion, while its basic earnings per share rose to 47.6 cents. These numbers meant that the company was seeing elevated demand across all its divisions, a trend that will continue.

IAG’s main advantage is that its top airlines have a good market share in key markets. For example, British Airways continues doing well in the transatlantic route, which is one of the most profitable. The North Atlantic route accounted for about 31.7% of the total ASK, followed by Europe and Latin America.

Read more: Here’s why the IAG share price just popped

IAG is now paying dividends

The return to profitability has pushed IAG to restart paying dividends. It paid an interim dividend of about €0.03 on September 9, and the management expects to continue making these payments in the future. Also, it has started repurchasing shares, with an ongoing €350 million plan.

IAG has also worked to improve its balance sheet. It ended the last quarter with over €16 billion in borrowings and €9.8 billion in cash and cash equivalents. It had €6.8 billion in cash and €16 billion in borrowings a year earlier.

IAG share price has also benefited from the relatively stable fuel prices. According to IATA, the average jet fuel price stands at $239, down by 22% from a year earlier. The cheapest prices are in North America, followed by Europe Asia, and Oceania.

However, the company has also faced some challenges. For example, the company will continue paying higher salaries, following a negotiated deal in 2023. The deal called for a 13% wage increase in a 18% month period. 

IAG share price analysis

IAG chart by TradingView

Turning to the weekly chart, we see that the IAG stock price has done well in the past few months. It has recently crossed the important resistance at 220p, the highest swing in March 2021. 

The stock has moved above the 50% Fibonacci Retracement level and formed a golden cross pattern. This pattern forms when the 50-week and 200-week Exponential Moving Averages (EMA) cross each other. 

The MACD and the Relative Strength Index (RSI) show that the stock has momentum as the latter has moved to the overbought level.

Therefore, the stock will likely continue rising as bulls target the next key level at 310p, the 61.8% retracement point. In the long term, the stock may jump to 450p. A drop below the key support at 200p will invalidate the bullish view. 

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