Member Info for WesStocks

Rate hikes working, inflation going down. Strong job numbers last week... now you do the math!!! Market is forward looking, going into 2023 will be insanely great for IAG!

Best , Wes x

Earnings were fantastic, we returned an operating profit for the second quarter of 2022 of €293m (£250m), compared with a loss of €967m (£826m)) a year earlier!

*********** First quarter of profitability since the start of the pandemic
• Continued recovery in capacity (78% of 2019 levels in 2Q 2022 vs 65% in 1Q 2022), broadly in line with guidance
• 2Q 2022 operating profit pre-exceptional of €0.3bn (vs loss of -€1.0bn in 2Q 2021)
• All businesses profitable at the operating level
• Revenue recovered to 88% of 2Q 2019 and almost 5 times higher than 2Q 2021

Liquidity of €13.5bn at end June (vs €12.4bn at end March), driven by positive EBITDA, strong forward bookings and
working capital

• NET DEBT REDUCED BY €688 MILLION.

• HUGE CASH: €9.19 Billion, up €1.25 Billion with significantly positive working capital, driven principally by bookings for travel in the second half of the year!

Almost €2.5 per share in cash given the free float! That's 208 GBX and stock is around 120 GBX, huge discount!

• Positive outlook for the rest of the year

• Forward bookings have recovered to a rate of c.90% of 2019 levels by volume and c.95% by revenue
• Demand is strongest on the key domestic, European, North Atlantic and South American / Caribbean routes
• Premium leisure revenue continues to be strong and has almost fully recovered to 2019 levels
• Business channel bookings have recovered to c.60% of 2019 in terms of volume and c.70% in terms of revenue
• Usual limited visibility of 4Q bookings apart from key holidays with no sign of demand weakness

• FY 2022 capacity now planned to be c.78% of 2019 levels compared to c.80% before
• Further moderated to enable operational resilience at Heathrow (mainly British Airways shorthaul)
• 3Q capacity to be c.80% of 2019 levels and 4Q capacity to be c.85% of 2019 levels
• North Atlantic capacity in 3Q expected to be 92% of 2019 levels compared to previous guidance of 95%

• Pre-exceptional operating profit to be significantly improved in 3Q compared to 2Q and to be positive for FY 2022
• Limited financial impact of BA’s capacity moderation
• Net cash flow from operating activities expected to be significantly positive for FY 2022

• CEO Comments on Heathrow airport:
IAG ICAG.L CEO GALLEGO: HOPE TO HAVE A MORE STABLE SITUATION AT HEATHROW BY END OF THE YEAR

To add lastly, IAG orders 37 A320neo family aircraft - this just shows that airlines are bolstering for a enormous demand surge in the up coming years!

NB/ In May, Boeing announced an order for 50 737 MAX jets from International Airlines Group (IAG), which owns several major European carriers including British Airways.

My thesis is intact and I still believe IAG is hugely undervalued! Commodity prices are rapidly falling, covid has become background noise and the war in Ukraine is resolving per the rec

Strong travel demand helps Ryanair return to profitability -> heads up to what is to be expected in the entire airline industry over the second half of 2022! IAG being one of the largest airlines will diffidently benefit from this surge in demand with reducing inflationary pressures in the commodities market.

Best, Wes x

Qatar Airways owns more than 25% of IAG. Demand is picking up, airlines are gearing for this increase in capacity and influx of customers + growth in air-cargo.

UAL earnings was very decent, revenue up almost 60% compared to Q1! The only reason it's panic selling is because they expect Q3 capacity to be down 11% compared to 2019! This is not too bad given the fact that there is an enormous war going on that is causing great inflationary pressures on crude oil (airlines' top expense)... there's also the raise in interest rates having substantial effects on consumer spending etc. So all in all I believe the earnings were great, not perfect but great considering the times we are in.

CFRA Maintains Strong Buy Rating On Shares Of United Airlines with $59 target!

Best, Wes x

The news might not be directly related to IAG but just to show the expansion and growth of the airline industry. IAG is a juggernaut in air travel and cargo! The whole industry is gearing for a boom in air travel/cargo demand!

https://www.reuters.com/business/aerospace-defense/massive-air-india-jet-order-eludes-farnborough-airshow-2022-07-20/

British Airways owner IAG also recently agreed to order 50 Boeing 737 MAX planes worth $6.25 billion! IAG has one of the biggest and most accomplished fleet in the world!

Best, Wes x

FARNBOROUGH, England July 18 (Reuters) - Delta Air Lines (DAL.N) will buy 100 Boeing (BA.N) 737 MAX 10 jets worth about $13.5 billion at list prices and has options to buy another 30, the U.S. carrier said on Monday.

Air travel demand is picking up rapidly! Airlines are hitting exceptional growth numbers and are almost near pre-pandemic levels. The war in Ukraine, high oil prices, pandemic and staff shortages all took a toll IAG's stock price and they're all priced in I believe. However, the rebound and growth figures are not valued in... therefore I believe we are at a bottom!

£1.8-2 target by EOY remains in place. We can have a sell off around £1.67 but it should pick up rapidly from there!

Best, Wes x

Oil down to levels before Russian invasion of Ukraine! I believe it is still elevated and my target for oil by EOY is $60!

This is really good for airlines, their biggest costs arise from fuel costs which almost down 30%!

Industry revenues are expected to reach $782 billion (+54.5% on 2021), 93.3% of 2019 levels. Flights operated in 2022 are expected to total 33.8 million, which is 86.9% of 2019 levels (38.9 million flights).

Passenger revenues are expected to account for $498 billion of industry revenues, more than double the $239 billion generated in 2021. Scheduled passenger numbers are expected to reach 3.8 billion, with revenue passenger kilometers (RPKs) growing 97.6% compared with 2021, reaching 82.4% of 2019 traffic. As pent-up demand is released with the easing of travel restrictions, yields are expected to rise 5.6%. That follows a yield evolution of -9.1% in 2020 and +3.8% in 2021.

Cargo revenues are expected to account for $191 billion of industry revenues. That is down slightly from the $204 billion recorded in 2021, but nearly double the $100 billion achieved in 2019. Overall, the industry is expected to carry over 68 million tonnes of cargo in 2022, which is a record high. As the trading environment softens slightly, cargo yields are expected to fall 10.4% compared with 2021. That only partially reverses the yield increases of 52.5% in 2020 and 24.2% in 2021.

Best, Wes x

Great GDP numbers out today showing a better than expected economy. Inflation numbers across the EU coming down. US CPI today, that will be elevated my guess is, however it is going to be a clear indication that it has peaked.

UK GDP:
3.5% YoY vs 2.5% Exp
0.5% MoM vs 0.0% Exp

We saw last week that German inflation had peaked and was starting to come down, even before ECB hiked rates! Today France CPI data is in and that's down too (EU is our biggest trade partner).

France CPI:
5.8% YoY vs 6.5% Exp.
0.7% MoM vs 0.7% Exp.

EU Industrial Production is also up!
1.6% YoY vs 0.3% Exp
0.8% MoM vs 0.3% Exp

Don't forget stocks/markets sentiment cycle from bottom to top:
*Despair
*Disbelief
*Acceptance
*Euphoria

Stocks bottom when all the news is negative and there is enormous fear and despair like there currently is and they top when euphoria is at maximum level like last march.

Delta Air Lines (NYSE:DAL) reported quarterly sales of $13.82 billion which beat the analyst consensus estimate of $13.40 billion by 3.16 percent. This is a 93.99 percent increase over sales of $7.13 billion the same period last year.

Delta posts $735 million profit, sees strong revenue in 3Q!! Earnings per share fell short of Wall Street expectations, however, which the airline blamed on high fuel prices and more than 4,000 canceled flights in May and June. (FYI FUEL COSTS ARE GOING DOWN, so next qtr will be even more impressive).

Delta is betting that consumers still want to travel and they have money, partly because they're no longer buying as much stuff for their homes. Delta predicted that third-quarter revenue will be 1% to 5% higher than in the same quarter of 2019. Higher fares apparently didn't discourage travelers.

The average flight was 87% full, just one point lower than in early summer 2019. By airline standards, that is a high occupancy figure and indicates that many flights during desirable morning and early-evening hours were sold out.

Oil prices have cooled recently, and that could give another lift to Delta. The airline spent more than $3.2 billion on fuel in the second quarter, an increase of 41% over the same quarter in 2019. Delta paid an average of $3.82 a gallon for jet fuel, but it expects to pay between $3.45 and $3.60 in the third quarter.

Best, Wes x

*UK carrier has slashed flights to mitigate staffing shortages
*Unions will take offer of higher pay to members after deal

I did mention a deal will be reached right! With this out the way we are going to see strong summer growth figures, and into next year we should see business boom to prepandemic figures!

The staff shortage is a serious issue, I'm aware and monitoring it real-time. I believe there will be new incentives to recruit more staff in the upcoming weeks, it is a difficult challenge that must be addressed and sorted before the latter part of the year.

Inaction from Rishi Sunak and Grant Shapps contributed to the "predictable" and "preventable" delays and cancellations that have crippled airports across the UK, the boss of a leading airline services company has said.

Now that they're all gone, I believe there will be urgency in the coming weeks for people replacing their roles and with a new PM, that changes will be made to the airline industry by way of more financial aid!

Best, Wes x

06-Jul-2022 18:39:37 - FITCH ON GLOBAL AIRPORT TRAFFIC SAYS OPTIMISM IS HIGH FOR SUMMER TRAVEL SEASON, WITH PENT-UP DEMAND SUPPORTING BOTH DOMESTIC AND INTERNATIONAL TRAFFIC

06-Jul-2022 18:39:47 - FITCH ON GLOBAL AIRPORT TRAFFIC SAYS RUSSIAN-UKRAINE WAR IMPACT HAS ONLY SEEN NOMINAL DIRECT CHANGES TO GLOBAL AVIATION TO-DATE

Best, Wes x

SOUTHWEST AIRLINES SAYS SUMMER CANCELLATIONS ARE TRENDING WELL BELOW 2020 AND 2019 LEVELS $LUV

U.S. air travel conditions improve over Fourth of July weekend - Reuters News

NEW YORK, July 5 (Reuters) - U.S. travelers braving the skies faced fewer flight delays and cancellations over the Fourth of July weekend when compared with the Memorial Day weekend in May, even as air travel approached pre-pandemic levels.

American Airlines AAL.O, which had a cancellation rate of 4.4% between May 27 and June 29, canceled just 2.4% of its flights this holiday weekend. There were improvements at Southwest Airlines LUV.N, United Airlines UAL.O and Delta Air Lines DAL.N as well.

IAG will see £1.80-2.20 by the end of 2022 or earlier possible by the end of Autumn! Crude oil also dropping rapidly, excess savings will be used to travel, demand will be huge!

Best, Wes x

Crude oil at $98. Citi Group also said today that oil could collapse to $65/bbl by year end.

Lower fuel prices means lower costs and lower ticket prices thus more flights = more profits! The excess savings during the pandemic will funnel into the travel industry.

UK government action to minimise disruption in the aviation sector and protect passengers:
https://www.gov.uk/guidance/uk-government-action-to-minimise-disruption-in-the-aviation-sector-and-protect-passengers

Only thing standing in the way of IAG going into summer is the Ukraine crisis. Russia now controls the entire eastern Donbas region. I believe this is going to force the western allies and Ukraine to sit back on the negotiation table. I expect a deal very soon, if not before this coming grain harvest definitely before September.

Recent Swiss conference sets principles for Ukraine reconstruction: https://www.swissinfo.ch/eng/swiss-conference-sets-principles-for-ukraine-reconstruction/47728090?utm_campaign=teaser-in-channel&utm_medium=display&utm_source=swissinfoch&utm_content=o

Best, Wes x

The use of the A380 marks the first time since April 2020 that Dallas has seen the double-decker quadjet, then with Qantas.
The A380 operates 1x daily to Dallas. The schedule is as follows, with all times local:
- Heathrow to Dallas: BA193, 13:05-17:00 (block time of 9h 55m)
- Dallas to Heathrow: BA192, 19:30-10:30+1 (9h)

July Heathrow-Dallas flights are up by 1% over the same month in 2019. Cirium shows that seats for sale have risen by a considerable 21.3%. There are now over 17,000 more monthly roundtrip seats on the route, an enormous increase in a long-established and mature market.

Demand is picking up rapidly! Early numbers suggest demand for 4th July travel has been record breaking, all great sign across the pond that should reflect positively to figures here too!

Best. Wes x

Air traffic is gaining pace, demand is picking up for travel and cargo. Excess saving has peaked in the US, and is much higher than what it was before the pandemic, I believe this will prevent a recession, at the worst case it wouldn't be long sustained.

Russia has given back Snake Island in order for agricultural exports to continue (business as usual), I suspect this could be the start of normalisation, although the situation is still very serious. The US is providing a further $50billion in arms with long range missiles, this could be the bargaining chip for Ukraine and to push Russia and bring down their demands during negotiation.

Monkeypox isn't a big worry for travel, as much as HIV isn't. The US also has the vaccine for monkeypox.

Deloitte suggests we will see growth for travel demand accelerate till Q4! Airports Council International (ACI)’s latest assessment has revealed a “positive and immediate impact on global air travel demand”.

ACI says this is a result of the lifting of travel restrictions in many European countries and the Americas. The Covid-19 pandemic saw the loss of 50.3 per cent of global passenger traffic for the full year 2021.

Global passenger traffic is set to reach 77 per cent of what it was in 2019, with traffic for 2022 forecast to total 7.1 billion.

ACI World Director General Luis Felipe de Oliveira said:

“Considering my recent trips and based on the latest data, there is no doubt that many travellers are eager to resume travelling—and the early summer volumes are a testament to it.

“With the combination of ‘vacation deprivation’ and an upsurge in confidence in air travel provided by increased vaccination rates and safety measures, the relaxation of travel restrictions will help boost the propensity for air travel and fuel the industry’s recovery.

“With many countries taking steps towards the return to a certain normality, lifting almost all the health measures and travel restrictions, we expect a jump in air travel demand in the second half of 2022.”

Lastly we can see inflation peaking in Germany with the first drop since many months! The data from the US should suggest the same, rate hikes are having a great impact. Commodity prices are falling down rapidly which should help boost the demand for airlines as reduced operating costs will imply lower tickets and hence greater demand.

Best, Wes x.

I expect a settlement to be reached before a strike, I'm hearing news that they're currently working to ensure minimum disruptions in the worst case scenario. People need to relax a strike isn't a big issue, the current real issue are the staff shortages and the daily cancellations as a result.

LONDON, June 23 (Reuters) - British Airways should make contingency plans to minimise disruption from strikes, Prime Minister Boris Johnson's spokesman said on Thursday, after staff at London's Heathrow voted in favour of striking in a dispute over pay.

"This is obviously a matter for British Airways and the unions and we would strongly encourage both to come together to find a settlement. We don't want to see any further disruption for passengers and strike action would only add to the misery being faced by passengers at airports," he told reporters.

"We expect BA to put in place contingency measures to ensure that as little disruption (as possible) is caused and that where there is disruption that passengers can be refunded."

Best, Wes x

I'm an IAG investor, I have substantial amount of shares. A strike is not the best outcome obviously to shareholders, but it is for the benefit of the working class people, the people who generate the wealth that is exploited by the ultra-rich and by those corporations who do not offer their workers decent working conditions.

This is just a blip, I'm sure the management will do their best to negotiate a deal that will benefit both our hard working staff and the company. The inflationary pressures are being exploited by companies; the cost of living is insane where full-time works are having to take state benefits while wealthy individuals pay zero tax across the western world.

Bit about the macro aspects: The logic to crush demand and drive unemployment to derail inflation is just not going to work, this government logic in the west is just going to destroy the middle class and low income families! It is going to make the poor even poorer and add that wealth into the pockets of the ultra-rich!

I believe in the long run this strike will benefit everyone. Let's not forget that the middle class built the US and UK and labour unions built the middle class. They gave us two-day weekends, 8-hr working days, maternity leave, retirement ages, occupational health/safety, workplace pensions, paid holidays, equality laws, minimum wage, right not to be sacked because you had a baby or became ill, pay increases, end child labour.

Via collective bargaining they achieved the right for working classes to organise themselves a standard of living above that of the 1850s Britain.

Countries with the highest union density have the most equality. Ranked below are countries with the highest equality ratings, source: OECD, World Bank.
- Iceland - 92.2% (union density)
- Denmark - 67%
- Sweden - 65.2%
- Finland - 58.8%
- Norway - 50.4%
- Belgium - 49.%
Whereas western countries with lowest equality also have the lowest union density such as the US( 10.3%) and UK (23.5%)!

So to conclude, hoping the strike does not go ahead and we reach a deal before that date with our workers who put hell of a lot of hard work, let's not forget the low class workers of this industry faced hell during the pandemic with mass redundancies! Now with 9-10% inflation they require adequate pay rise to help them cope with this cost of living crisis.

I'm still bullish for the airline industry as a whole, this is just a blip and we will hopefully resolve it amicably! I will use this opportunity to add more shares hopefully.

Best Wes x

REFINITIV: International Consolidated Airlines Group (LON:IAG) PT Set at GBX 162 by The Goldman Sachs Group

23-Jun-2022 07:12:25International Consolidated Airlines Group (LON:IAG) PT Set at GBX 162 by The Goldman Sachs GroupJun 23, 2022

International Consolidated Airlines Group ( LON:IAG )received a GBX 162 ($1.98) price objective from equities researchers at The Goldman Sachs Group in a note issued to investors on Tuesday. The Goldman Sachs Group's price target would suggest a potential upside of 37.90% from the stock's previous close.

A number of other equities analysts also recently issued reports on IAG. Liberum Capital reaffirmed a "buy" rating and set a GBX 200 ($2.45) price target on shares of International Consolidated Airlines Group in a research report on Friday, February 25th. Deutsche Bank Rese... set a GBX 155 ($1.90) price target on International Consolidated Airlines Group in a research report on Tuesday, May 24th. Deutsche Bank Aktiengesellschaft reaffirmed a "hold" rating and set a GBX 155 ($1.90) price target on shares of International Consolidated Airlines Group in a research report on Tuesday, May 24th. Barclays reaffirmed an "overweight" rating and set a GBX 200 ($2.45) price target on shares of International Consolidated Airlines Group in a research report on Monday, May 23rd. Finally, Sanford C. Bernstein set a GBX 190 ($2.33) price target on International Consolidated Airlines Group in a research report on Monday, May 9th. Three investment analysts have rated the stock with a hold rating and four have given a buy rating to the company's stock. Based on data from MarketBeat, International Consolidated Airlines Group currently has an average rating of "Moderate Buy" and an average price target of GBX 185 ($2.27).

Shares of LON:IAG [https://www.marketbeat.com/stocks/LON/IAG/price-target/] opened at GBX 117.48 ($1.44) on Tuesday. The company has a market capitalization of £5.82 billion and a price-to-earnings ratio of -2.57. International Consolidated Airlines Group has a 52 week low of GBX 108.58 ($1.33) and a 52 week high of GBX 199.50 ($2.44). The company has a quick ratio of 0.67, a current ratio of 0.80 and a debt-to-equity ratio of 2,317.97. The firm has a 50 day moving average of GBX 130.31 and a 200 day moving average of GBX 141.70.

International Consolidated Airlines Group, SA, together with its subsidiaries, engages in the provision of passenger and cargo transportation services in the United Kingdom, Spain, Ireland, the United States, and rest of the world. The company operates under the British Airways, Iberia, Vueling, Aer Lingus, and LEVEL brands.

We will soon see oil around $70! The price is on a free fall, this is going to have extremely positive impacts on Airlines (Fuel: At $192 billion, fuel is the industry’s largest cost item in 2022 (24% of overall costs, up from 19% in 2021). Airlines are returning to the A380 superjumbo planes due to picking up demand, this is a clear indicator that the pace of demand is increasing rapidly.

Latest from the IATA:

The International Air Transport Association (IATA) announced an upgrade to its outlook for the airline industry’s 2022 financial performance as the pace of recovery from the COVID-19 crisis quickens.

Forecast highlights include:

Industry losses are expected to reduce to -$9.7 billion (improved from the October 2021 forecast for an $11.6 billion loss) for a net loss margin of -1.2%. That is a huge improvement from losses of $137.7 billion (-36.0% net margin) in 2020 and $42.1 billion (-8.3% net margin) in 2021.

Industry-wide profitability in 2023 appears within reach with North America already expected to deliver an $8.8 billion profit in 2022.

Efficiency gains and improving yields are helping airlines to reduce losses even with rising labor and fuel costs (the latter driven by a +40% increase in the world oil price and a widening crack spread this year).

Industry optimism and commitment to emissions reductions are evident in the expected net delivery of over 1,200 aircraft in 2022.

Strong pent-up demand, the lifting of travel restrictions in most markets, low unemployment in most countries, and expanded personal savings are fueling a resurgence in demand that will see passenger numbers reach 83% of pre-pandemic levels in 2022.

Despite economic challenges, cargo volumes are expected to set a record high of 68.4 million tonnes in 2022.

“Airlines are resilient. People are flying in ever greater numbers. And cargo is performing well against a backdrop of growing economic uncertainty. Losses will be cut to $9.7 billion this year and profitability is on the horizon for 2023. It is a time for optimism, even if there are still challenges on costs, particularly fuel, and some lingering restrictions in a few key markets,” said Willie Walsh, IATA’s Director General.

Best, Wes x

BOE'S MANN: THE LATEST UK GDP DATA HAS STRONGER PROSPECTS FOR CONSUMPTION GOING FORWARD THAN THE NEGATIVE SKEW FROM THE END OF TEST AND TRACE SUGGESTS.

Data also suggest demand is picking up rather quickly and expected to grow drastically in the coming months! We're going to see air travel and air freight back stronger than before! Oil prices and commodities are also coming back down which will reduce operating costs and hence travel costs of airlines, this will lead to more people travelling and greater demand!

If you added 110s with me kudos to you! It is still extremely cheap here! £2s will be in sight by next year!

Best x

Hey everyone, just wanted to give an update on recent events that will have an impact on air travel as a whole.

Canada dropping vaccine mandate for domestic and outbound international travel as of June 20

Unvaccinated Canadians able to board planes, trains as feds pause COVID-19 mandate

The whole world is opening up, China is also opening very soon as they've now got cases under control. The USA is fully open too.

There are clear indications now that the Ukraine/Russia crisis might be coming to an end too. Biden throwing Zelensky under the bus, Stoltenberg claiming Ukraine needs to compromise for a deal. Russia ensuring safe passage of trade through ports for hydrocarbons and agriculture.

More news suggesting normalisation:

U.S. EXTENDS GENERAL LICENSE AUTHORIZING CERTAIN TRANSACTIONS RELATED TO ENERGY WITH SEVERAL RUSSIAN ENTITIES UNTIL DEC. 5

Oil prices and inflation seems to have peaked, per the PPI numbers and counter steps being taken... Also OPEC+ (Saudis) are mostly covering for Russian supply for the west with extra 700kb/d. Additionally OPEC is suggesting a reduce in demand to follow soon... meaning supply will shortly suppress demand, thus, prices will come down.

TO COMBAT INFLATION, A BIDEN ALLY PROPOSES A 21% SURTAX ON OIL REVENUES. - WHITE HOUSE.

OIL MARKET: American SPR crude barrels are hitting the market at record pace. According to preliminary DoE data, ~7.7 million barrels were released last week (or ~1.1m b/d). If confirmed by @EIAgov data, that would be the fastest weekly release ever

Best x