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The airline industry was among the hardest hit during the pandemic. Even now, valuations are nowhere near where they were in early 2020. International Consolidated Airlines Group SA
IAG
2.23%
, which owns British Airways, was among the worst-performing airlines due to lockdowns and less government support.
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But business is improving, and we’re seeing signs of a sustainable recovery in air travel and profitability. Third-quarter profit easily beat City forecasts and bookings are in line with expectations.
IAG is currently the cheapest airline stock listed on the London exchange. In fact, it’s the cheapest stock in the FTSE 100 index based on forecast price/earnings ratio. There’s also much less short interest in the shares - so far fewer professional investors betting against the company.
IAG has some of the best margins among legacy carriers, and recently outlined ambitious plans to transform the company - delivering sustainable growth, world-class margins and maximising long-term shareholder returns.
IAG sets sights on dividend return
FTSE 100 dividends in January total almost £2.6bn
Medium-term targets include an operating margin of 12 to 15% (they were 12.7% in 2019), Return on Invested Capital of 13 to 16% (14.6% in 2019); and achieving net debt-to-EBITDA less than 1.8 times over the cycle.
We’re promised a dividend too at some point. And IAG wants to exploit the full potential of BA’s more affluent and recession proof customers.
Will there be turbulence in 2024? Sure. The oil price is volatile, and a recession is possible. There’s also some uncertainty about allocation of capacity at major UK airports.
But an attractive valuation, growth potential and self-help put IAG in a great position to continue its recovery in the year ahead.
Keith Bowman
I havd to sag IAG have got me bamboozled . Ive bedn in and out and currently in thinking it was the end of this debacle snd we'd sed some logic to the share movements.
I think if theres no signs of a better outlook by this summer its time to look elswhere.
Marybr
They're definitely lagging behind but as i said barring a disaster the Feb results snd outlook should be positive. It was always there intention to return dividends in 2024 so lets hope thats the case.
I too will top up should there be any blips on the way
Personally I think its inevitable the price will see a substantial increase.
Marybr
Theyre definitely lafging brhind bug as i said baring a disaster the Feb results snd outlook should be positive. It was always there intention to return dividends in 2024 so lets hope thats the case.
I too will top up should there be any blips on the way
Personally I think its inevitable the price will see a substantial increase.
Im expecting IAG to catch up a little, so just bought back in. Im expecting around 180 by year end/first week in Jan.
I can honestly see some positive broker ratings coming which Im sure will help