Intl. Cons. Air Rg (IAG LN)

Global Markets Comment

We see IAG as the leading network operator in Europe and its cost reduction programme have largely panned out in their favor. Despite the low visibility on when travel restrictions will be relaxed, we believe that the UK’s lead in approving a COVID-19 vaccine will eventually lead to the establishment of travel corridors and the remobilization of aviation. We also expect IAG to reach cash break even during 1H21 and has over €9bn of liquidity to see it through summer 2021. Share price have recently broke out of the 200-day moving average and we see further upside in IAG as it is still down 35% YTD despite positive vaccine news.

Performance since inception*

Company Profile

IAG, also known as International Airlines Group, is one of the world’s largest airline groups with 598 aircrafts and is the result of a merger between British Airways and Iberia, the flag carriers of UK and Spain. It also acts as the holding company comprising UK-based airline Bri􀀁sh Airways, Spanish-based Iberia and Vueling, and Irish-based Aer Lingus

Price History 1 year

Investment Case

IAG has embarked on an extensive cost reduction programme, which includes retring older fleet, material redundancies/improved productivity terms and more efficient procurement from suppliers. IAG is expected to be the largest contributor towards both long and short haul capacity in Europe for 1Q21 and we see IAG as the leading network operator in the region. With uncertainty around Brexit likely resolved, we believe IAG’s can likely re-rate and ride on the wave of recovery following a vaccine

Price History 5 years

Risk in Investment Case

Main risk factors for International Airlines Group are 1) Slower than expected recovery of global aviation traffic; 2) Higher than expected cash burn rate which may result in worsening liquidity position and further fundraising.

Hong Kong & Singapore Private Clients

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