IAG shares rise on progress at Iberia-171

British Airways parent company on the rise

British Airways parent, IAG

British Airways parent company, IAG, has seen its share price climb 5.1p to 222.5 on the back of JP Morgan moving from neutral to overweight (buy) in its advice to investors. The reason for this shift has been positive news coming out of negotiations between unions and management aimed at reducing headcount at Spain’s struggling flag-carrier, Iberia. While British Airways has been trading relatively successfully over the last 18 months, Iberia has found itself struggling both with the downturn in the Spanish economy and it’s own structural weakness.

During the boom years at the start of the century any such problems at Iberia were set aside as the airline benefited from a growing economy at home as well as a surge in travel to Latin America, the airline’s dominant international market.   The relative weakness of the airline industry in Latin America has mitigated what could have been a far worse situation for the airline although local competitor Air Europa may be more more of a worry now.

With British Airways taking delivery of a number of new long-haul aircraft over the coming years, and with its increased slots at Heathrow following the takeover of bmi, don’t be surprised if the airline introduces both increased frequency and new routes to Latin America. The new Boeing 787 Dreamliner in particular will allow British Airways to look at routes which otherwise might not have been viable such as Bogota & Santiago de Chile. Of course any decisions that the airline makes in this regard will also be shaped by the outcome of the LAN / TAM merger and whether the new airline group remains within the One World alliance.


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