IAG, easyJet shares fly up on US reopening news

• International Consolidated Airlines Group (LON: IAG) share price hits a two-month peak on Tuesday (21 September)
• easyJet (LON: EZJ) share price brushed past 663 pence on Wednesday
• Both stocks were boosted by the US lifting travel restrictions on the UK and EU
• Keen to take advantage of IAG and easyJet’s rising share prices? Open an account with us to take a long position on both stocks today.

IAG, easyJet stock prices in full flight

UK airlines saw their stock prices soar this week, after the US said it would relax travel restrictions on the UK and EU countries from November.

British Airways’ owner International Consolidated Airlines Group (IAG) shares flew up 19% following the announcement, while low-cost carrier easyJet’s share price rose by over 5%.

In celebration of the reopening of US borders, British Airways launched a flash sale on Monday and Tuesday this week, with return deals to New York and Los Angeles from as low as £320 and £349 respectively.

That helped IAG’s share price to hit a two-month high price of 177.4p a share on Tuesday.

The stock was aided by a statement from its chief executive Luis Gallego earlier this week, in which he denied rumours that the group was planning to raise funds from shareholders via a rights issue.

‘We do not see the necessity to do a rights issue and are not considering it,’ Gallego told The Sunday Times, adding that the company is currently exploring ‘different options’ with banks.

‘We have revolving credit facilities, we are analysing other ways of financing the group so we have alternatives before we [consider] another rights issue,’ he said.

On the contrary, rival easyJet launched a rights issue that would raise roughly £1.2 billion (US$1.7 billion) from shareholders at the start of this month. The decision came after the board rejected Hungarian airline Wizz Air’s all-share offer.

There was also speculation that IAG and easyJet are considering a merger. On the matter, Gallego told The Times: ‘We talk to all airlines that can be interesting to us’.

What’s the outlook for IAG and easyJet?

The latest market research shows that out of 29 analysts, 21 rated IAG shares ‘buy’, seven suggested ‘hold’, and one recommended ‘sell’. Their average 12-month target price stood at 230.53p per share, according to Bloomberg data.

Bullish research teams with ‘buy’ or ‘overweight’ calls included Barclays with a 230p target, Liberum with a 215p target, and Credit Suisse with a 256p target. HSBC suggested ‘buy’, but cut its target to 220p, from 240p.

Meanwhile, easyJet shares have a consensus rating of ‘buy’ from 11 brokers, according to the latest MarketBeat data.

Deutsche Bank kept a ‘buy’ recommendation on the stock on 19 September, while both UBS Group and Barclays reiterated a ‘hold’ call on the low-cost airline on 12 September.

Overall, research teams are seeing ‘attractive valuations’ for UK airline stocks, which had been volatile of late amid concerns of new travel curbs, Reuters reported.

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