What’s Next for IAG Share Price Ahead of Q1 2022 Results

When will IAG report first quarter 2022 results?

International Consolidated Airlines Group, better known as IAG, will release its first quarter results on the morning of Friday, May 6.

Overview of IAG Q1 results

The recovery of the airline industry is still in its infancy. There is expected to be a boom in demand this summer as people start to travel again to make up for lost time during the pandemic but, for now, demand remains well below levels of before the pandemic and the market remains competitive as all airlines strive to attract returning customers.

IAG said it would operate at 65% of pre-pandemic levels in the first quarter of 2022, compared to 58% in the fourth quarter of 2021. The Omicron variant continued to weigh on bookings in January and February, but IAG said it had “minimal impact on bookings for Easter and summer 2022”, signaling that things should continue to improve in the future.

Total revenue is expected to increase to 3.33 billion euros in the first quarter of 2022, compared to just 968 million euros the previous year, when the pandemic disrupted the travel industry much more.

IAG is expected to remain in the red and report an adjusted operating loss – the company’s overall profit measure – of 521.0 million euros in the first quarter. The loss will be due to the impact of the Omicron variant in early 2022, higher costs when rebuilding capacity, as well as the seasonal lull in the first quarter. Nevertheless, this will mark a major improvement on the loss of 1.17 billion euros recorded the previous year.

Importantly, IAG said it expected to report its first operating profit since the pandemic began in the second quarter, with analysts currently forecasting it could report adjusted profit of 263 million euros.

“IAG expects its operating income to be profitable from the second quarter, leading to both operating income and net cash flow from operating activities to be significantly positive for the year. . This assumes no further setbacks related to COVID-19 and government-imposed travel restrictions or the material impact of recent geopolitical developments,’ the airline said in February.

IAG said bookings have improved since the start of 2022 and it expects a “robust summer” that will help the airline operate at around 85% of pre-pandemic capacity year-round in 2022. This will be a marked improvement from just 36% in 2021.

The significant improvement in trading, coupled with the fact that IAG has reduced costs and become more efficient during difficult times over the past two years, means the airline is “poised to return to profitability in 2022”.

Consensus figures currently suggest that IAG can generate an adjusted operating profit of 704 million euros in 2022. This would end two consecutive years of losses which amounted to 7.33 billion euros combined, but will remain well below the profits that were made before the pandemic broke out.

It will be the first set of results since Nicholas Cadbury, IAG’s new chief financial officer, joined the company in March. He agreed to join last year and quit as chief financial officer of the hotels, pubs and restaurants operator. Whitbread to replace Steve Gunning. Cadbury’s number one task is to guide the company to profitability this year.

However, it will be a challenge. Demand may be picking up, but the airline industry is being hit by rising costs across the board at a time when airlines need to price competitively to win back customers, especially for short-haul flights. couriers across Europe, as IAG competes with low-cost carriers like Ryanair, easy Jet and Wizz Air. Meanwhile, IAG and others are also struggling to recruit staff who are reluctant to return to a volatile industry after finding other forms of work during the pandemic, which risks leaving airlines without the workers whose they need to take full advantage of the surge in demand this year. .

The Financial Times reported late last month that British Airways, one of many brands in IAG’s portfolio, is being forced to cut its schedule until the end of June, about a month longer than originally planned. It’s unclear how much the schedule needs to be reduced, but it’s being done to ensure there are fewer but more reliable flights after several airlines were forced to cancel swaths of flights in recent months due to a lack of staff. Airlines may have to raise their pay or benefits to entice staff to return, with British Airways alone cutting around 10,000 jobs as it sought to save money at the height of the pandemic. This could allow the industry to better meet demand, but could also threaten its ability to return to profit.

Capital expenditure is expected to reach 3.9 billion euros in 2022 as it continues to rebuild capacity and takes delivery of planes after delaying them last year, from just 700 million euros in 2021. This could push net debt further than 11.7 euros. billion euros reported at the end of 2021, which has steadily increased over the past two years, from less than 7.6 billion euros at the end of 2019. Analysts estimate that this figure could reach 13.5 billion euros by the end of this year.

What’s next for IAG stock price?

IAG shares were stuck in an extended downtrend over the year until March 2022 before finally bottoming out after hitting a 17-month low at 109p. The stock has managed to rebound more than 26% from the low and is now trading closer to 147p.

The stock is currently trading between the 50-day moving average at 141p and the 100-day moving average at 148p. But the most important trend is the growing wedge that has formed over the past couple of months. The RSI remains in broadly neutral territory and trading volumes have increased over the past 10 days to suggest that the current trend will continue. We could see stocks continue to rise steadily towards the 200-day moving average at 156p before the rising wedge triggers and leads to a reversal.

Should a reversal occur, stocks could quickly unravel and return the gains seen in recent months. The first downside target below the 50-day sma is 132p and then 125p, but a break below here would be more meaningful as it reopens the door to the 17-month low of 109p.

If the uptrend can gather momentum, the stock should be able to retake the 200-day sma before targeting 167p and then the 2022 high of 180p. Notably, the 17 brokers that cover the airline believe it can also climb near these highs over the next 12 months with an average target price of 179p.

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