Member Info for Istabrraq

@Meconopsis, Thank you for the detailed reply. The freeing up & or re-allocation of capital was my basic understanding of the solvency 2 reforms.

So moving into & past 2025 we should see more implementation & potentially any business performance gains thereafter, hopefully?

I do wonder if the stock analysts are factoring in the possible upsides when they assemble their reports? Some of the PHNX price targets they have recently released seem a bit too low IMO.

Thank you both for the replies, very informative.

Can anyone provide any instances of the benefits (likely, pending or received) around the solvency 2 reforms in relation to PHNX? This & the dividend have been the main reasons for my PHNX investment. I believe the reforms are still ongoing, however I just wanted to know if anything had tangibly changed that would alter the business performance (good or bad). TIA.

Fingers crossed the Q3 results are better than their investor relations.

Does anyone know or have a probable time for this years pending Q3 trading update (best guesses accepted)?Last year the update occurred on Thursday 12th Oct, so is Thursday Oct 10th or even 17th a likely date?

@Royga, yes I agree Israel will likely hit Iranian oil sites. But what will Iran then do? Some say Iran in return may blockade the Strait of Hormuz (a strategic oil shipping channel). Oil traders are speculating on a possible > $100 oil price surge. Worrying times ahead.

@garonne, you are not alone. i too sold all of my iag holding yesterday. like you i had been a long term holder since 2020 & been through all the ups & downs with the sp. ****ed off is an understatement, but i left with a small profit & since invested it in one of my other dividend paying stocks. iag is a sleeping giant & will come good at some point, but the me crisis & ensuing uncertainty left me with little choice. i will look to buy back in again when the circumstances change. good luck to the remaining holders. atb

@Laralara1, a quick estimate is approx just under 13 million shares (2.07% of 614 million). Probably more but based on what is openly declared as shorted (>0.5%) this is just ballpark figure to open with.

Of note & aside from the current geo political games the imminent Q3 results from a number of US transatlantic carriers are due to be released in October. I think Delta announce on the 9th, United & American Airlines on the 17th (apologies if I have any of the dates wrong). The IAG sp may well get a steer (good or bad) from these industry competitors in the lead up to their pending results in early Nov. Something to consider before selling (or buying) IMO. LTH

Bent?…Yes. Price manipulated?…Yes. And today I sense something brewing in the background. The current price paralysis (like the sp being held within a tolerance window) suggests to me that somethings afoot. Whether it’s an orderly negotiated exit by the shorters or an imminent re-rate or an announcement idk.

@TomBeef, have you considered accidentally rehoming your dog?

@Conger2, if you are able to why not buy back in? IMO barring any global catastrophes the IAG sp will continue to rise, could be 300p this time next year.

@IAGLongTerm, whilst it may be tempting & no one can know the future for sure I will not be selling anytime soon, definitely not (see quote below).

“Analysts now expect that at the end of the 2024 financial year, its net debt to adjusted cash profit ratio will stand at 1.1, well below the group target of less than 1.8.“

IAG also restored shareholder payouts for the first time since the pandemic this summer, declaring an interim dividend of 3 cents per share. The shares now offer a forward dividend yield of 2.8 per cent. The balance sheet has also been recovering: net debt stood at €6.4 billion as of the end of June, compared with €9.2 billion at the same point last year.

The group will also have more cash now that it has abandoned its plan to buy Air Europa; the board concluded that it would not be in the best interest of shareholders, following concerns among European Union officials around its impact on competition. IAG did have to pay a €50 million termination settlement expense.

Analysts now expect that at the end of the 2024 financial year, its net debt to adjusted cash profit ratio will stand at 1.1, well below the group target of less than 1.8.

There is some speculation among City analysts that IAG could announce a share buyback, given the strength of the balance sheet, strong trading and the relative weakness in the share price. Buying back 6 per cent of the market cap, worth around €600 million, would only increase its leverage by 0.1, according to analysis by the Bank of America.

Advice Buy

Why Healthy travel demand and improving balance sheet

Travel demand came back with a vengeance when lockdown restrictions were lifted, with operating profits doubling in 2023 to a record €3.5 billion. So far this demand has held up well, with passenger revenue up 11 per cent in the first half of this year, alongside a 7.5 per cent increase in capacity. This meant passenger revenue per available seat kilometre, an important industry metric, rose 2 per cent to €8.33.

The group’s operating margin did drop 0.4 percentage points to 8.9 per cent thanks to higher costs. The group has been investing to improve service levels, hiring an additional 7,000 staff in the first six months of the year, with employee costs rising by roughly 13 per cent.

Still, it looks on track to achieve its medium-term targets of operating margins between 12 and 15 per cent, return on invested capital somewhere between 13 and 16 per cent, and capacity growth — measured by available seat kilometres — of 4 per cent to 5 per cent per annum up until 2026. All, other than its margin, landed on target for the first half of the year.

The shares trade at just 4.8 times forward earnings, on the lower end of London-listed airline operators and at a discount to its peer Lufthansa, which trades at a multiple of 6.9. Air France-KLM trades at a lower 3.4 times forward earnings after the shares took a hit during the summer, as a significant number of would-be visitors avoided booking trips to Paris during the Olympics.

Shares in the British Airways owner International Airlines Group, otherwise known as IAG, are still trading a third below their value before the pandemic. But since this column last rated the stock as a buy six months ago, the shares have rebounded by 30 per cent. So can the FTSE 100 group climb back to its previous heights?

IAG is now the best performer among local airlines over the past year. Shares in easyJet have returned 9 per cent in the past 12 months, while the Dublin-listed Ryanair has dropped 8 per cent. But IAG is singular in London’s stock market for its sheer scale. It is one of the three big European airline operators, alongside Air France-KLM and the German group Lufthansa.

Most of IAG’s revenue comes from British Airways — which made €1.4 billion in operating profit on revenue of €14.3 billion in its 2023 financial year — followed by Iberia, Vueling and Aer Lingus.

@MattTheBrave, thanks for the brief explanation. So the current IFRS status is a short term pain with a long term gain? Buy the dip!

@Intelligence, thanks for the info on the divi tax. I have my IAG shares in an ISA, is there anyway to claw back the tax back?

Idk, could it be an exodus from M&G? Whatever it may be the rise here is warmly welcomed, long may it continue.GLA

Agree, she also seems the type to agree a dividend outlay only when prudent to do so.