IAG shares gain altitude, rising 4%

One of our analysts discusses IAG's recent update to the market.

Article updated: 10 May 2019 9:00am Author: Ian Forrest

  • Improving non-fuel costs and full-year profit guidance remaining the same offer investors some reassurance in light of recent performance
  • The 60% drop in operating profits caused by a range of headwinds including rising fuel costs
  • Despite concerns over post-Brexit ownership, we continue to recommend the shares as a ‘Buy’

British Airways owner, IAG, reassured the market with their first quarter results, despite the fact the company reported a 60% drop in operating profit at €135m. That was partly due an 11% rise in fuel costs on a constant currency basis. The company highlighted foreign exchange headwinds, market capacity and the timing of Easter as other factors affecting its performance. Passenger unit revenue declined by 1.4%; however the company expects an improvement over the course of 2019 and full-year operating profit is still expected to be the same as last year.

The shares gained some altitude in early trading with a 4% rise, which will be welcomed by investors given that they’ve been in a nosedive over the last three months. The fact that full-year profit guidance remains the same and non-fuel costs are expected to improve, are certainly positives for investors. While some uncertainty remains around whether the company will conform to the EU's rules on ownership post-Brexit we continue to recommend the shares as a 'Buy' for investors seeking growth but willing to accept a higher level of risk.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

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Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.