Having been battered throughout the whole pandemic, International Consolidated Airline Group (LSE:IAG) shares have started to rebound. I bought shares in this firm during the depths of the crisis, hoping that a return to international travel would be on the horizon at some stage. Fast-forward two years and I think we may start to see better results in the coming months. Before the summer holidays, should I be buying more IAG shares? They currently trade at 144.18p. Let’s take a closer look.
IAG shares and the reopening of borders
The general operating environment for airlines has improved markedly over the last couple of months.
In March, the UK government scrapped all travel-related pandemic restrictions in a boost to the industry. IAG shares jumped nearly 6% in the two days following the news.
Furthermore, countries like Norway and Sweden have removed all entry requirements and France and Italy have partially reopened.
The US also reopened its borders in November 2021, giving IAG a lifeline. It is no secret that the transatlantic routes are worth over $1bn through its flights operated by the British Airways division.
Make no mistake, this is all extremely helpful for this airline giant.
IAG has the added benefit that it is global. This means that it can operate flights to a greater number of destinations compared to short-haul competitors like easyJet and Wizz Air. The latter firm has been hit particularly hard by fears of the war in Ukraine impacting operations from its Budapest hub.
Improving financial results and capacity figures
IAG’s results also show signs that it has weathered the worst of the storm.
Between 2020 and 2021, it reported that losses had halved from €7.8bn to just €3.5bn. With significantly improved travel conditions, it is possible that this could turn into a profit in the coming years.
It should be noted, however, that past performance is not necessarily indicative of future performance.
What’s more, the passenger capacity figure for the final three months of 2021 was 58% of 2019 levels. This rose from 43% in the previous quarter.
Whereas the final quarter included Omicron-related cancellations, future results will factor in reopened borders and increased demand during the Easter and summer holidays.
Buying more IAG shares for my portfolio still comes with risks though. The war in Ukraine has resulted in higher oil and gas prices. This will have a knock-on effect on the price of jet fuel. It is possible that this will eat into IAG’s future balance sheets.
Staff shortages have also led to flight cancellations in April, although I believe this issue can be resolved satisfactorily by the summer.
Conditions are improving for the airline industry and IAG’s global reach is aiding its own recovery. As we move from Easter into summer, I think we could begin to see better results. I will be buying more IAG shares soon in anticipation of a more fluid travel environment.
