RE: Up or Down5 Oct 2018 15:34
Yes, you're correct - that was my original plan.....but the spike in Oil prices worried me ( and they've jumped in the past week). Given the volatility in Oil price and the fact that the market is pricing in for an increase in the medium term, it's likely the airline SP's will be impacted.
I'll wait until November to see if Oil has stabilised. My view is that airlines SP's will not increase until oil drops and stabilises. IAG are only 50% hedged for Oil and then only until first quarter of 2019. If Oil stays where it is then any new hedging contracts will cost airlines more. RYA are not hedged at all, and their latest announcement is that this will cost them an extra £100m.
Airline SP's are primarily driven by Oil costs.....and right now the market appears to be indicating an increase in Oil over the medium term. This is the big unknown, hence why all airlines have dropped recently. IAG are my favourite airline - great fundamentals, profits in excess of £2 billion - great P/E multiple, but concern over Oil is driving everything down.
I've never seen IAG drop everyday (without fail) for over 2 weeks...and it's only driven by concern on where Oil is going. IAG is probably the most profitable airline in the world and I will get back when I see evidence that Oil price has stabilised.....too much of an unknown risk at the moment.