A commentary on International Consolidated Airlns Grp SA (LON:IAG)’s Q1 trading update from Freetrade analyst, Emilie Stevens.
IAG’s Recovery
For the first time in a (very) long time, IAG can say its expectations for the future remain intact.
Plans for full year profitability and positive cash flows have done well to not be derailed by the Omicron variant, staff shortages and the war in Ukraine which has disrupted the air space.
Q1 2022 hedge fund letters, conferences and more
The first-quarter loss is slightly bigger than expected but we expect the market will be forgiving, it’s a drastic improvement on last year and other vitals are promising. Capacity is rebuilding and is still expected to reach around 80% of pre-pandemic levels by the end of this year.
The potentially unexpected bit of good news is that there’s been a recovery in not just leisure but business travel too, which BA relies more heavily on than its peers.
Behind the check-in desks, IAG’s battle wounds are significant though.
Debt is massive and with only slim positive cash flows is likely to remain a burden for a while. Staffing is a real issue (laying off thousands over the pandemic hasn’t served them well in the long run).
And that’s before you get to the competition – are IAG really the short haul carrier to beat?
Recovery is undoubtedly underway but investors should remember it started from a very, very low base.
