Will the IAG share price freefall after €2.75bn capital hike?
Shares in IAG continue to fall this week as the company pushes forward with its planned €2.75 billion capital raise, with majority shareholder Qatar Airways supporting the move in exchange for board representation.
Shares in International Consolidated Airlines Group (IAG) continue to fall this week as the company pushes forward with its planned €2.75 billion capital raise, with major shareholder Qatar Airways supporting the move in exchange for board representation.
Qatar Airways, which has slowly built a signifcant shareholding (25.1%) in IAG, has proposed two directors to sit on the board of British Airways following the cash call.
IAG CEO Willie Walsh told listeners on Ireland’s RTE Radio that he believes shareholders will be supportive of the capital hike, which is necessary to strengthen its balance sheet after a disappointing first-half performance in 2020 as a result of the coronavirus pandemic.
News this week has seen IAG shares trade 7% lower on Friday, with the stock having fallen 12% over the last five trading sessions as investors pull back as fears of a second wave of Covid-19 infections begin to materialise, dealing yet another blow to an already downtrodden aviation industry.
IAG is trading at 167p per share at the time of publication, with the stock down 73% year-to-date.
IAG shares sink lower after suffering record Q2 loss
As a result of the myriad of headwinds facing the airline industry, IAG recorded a record loss in its second quarter (Q2), with government-imposed lockdowns grounding flights and almost entirely wiping out passenger traffic in 2020.
In fact, passenger traffic fell 98.4% over the three months to June, prompting the airline group to slash capacity by 95.3%.
‘We continue to expect that it will take until at least 2023 for passenger demand to recover to 2019 levels,’ Walsh said in a statement on Friday.
‘Each airline has taken actions to adjust their business and reduce their cost base to reflect forecast demand in their markets not just to get through this crisis but to ensure they remain competitive in a structurally changed industry,’ he added.
IAG recorded an operating loss for Q2 of €1.3 billion – narrowly beating analysts -€1.4 billion forecast – down from the €960 million profit that it achieved in the same period last year.
IAG: technical analysis
Shares in IAG have been on the slide over the past two-months, with the stock dropping to new lows not seen since mid-May.
‘There is a possibility that we are looking at a retracement of the 148p rally, yet with price having cleared out all the Fibonacci levels, the chances of another multi-year low are growing,’ Josh Mahony, senior market analyst at IG said.
‘As such, any bullish outlook would require a break through the prior swing-high (currently 233p),’ he added. ‘Until then, further downside looks likely as we close in on the prior low of 148p.’
How to trade stocks with IG
Looking to trade the IAG and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs and spread bets in a few easy steps:
- Create an IG trading account or log in to your existing account
- Enter ‘International Consolidated Airlines Group’ in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
