After a whirlwind 2020, the International Consolidated Airlines Group (LSE: IAG) share price is up 14% year-to-date. Last Wednesday, the share price rose amid the relaxation of quarantine rules. This now means that double-jabbed passengers no longer need to quarantine when arriving in England from the US and Europe, bar a few exceptions. Despite the rise this year, the IAG share price has seen a 9% fall over the past month. So, is now a good time to buy IAG shares? Let’s take a look.
After the release of its HY21 results last Friday, IAG shares saw a 5% fall on the day. The standout figure for half-year was the total revenue, which was down 58% for the period. To add to this, half-year net debt saw a near 25% increase from the same period last year. Although one could have expected such results, with Covid-19 continuing to plague the capabilities of airlines to function at full capacity, investors clearly were not impressed by the results.
With this said, the Q2 2021 results provided some form of optimism. Total revenues were up 77% from Q2 2020, whilst its operating loss for Q2 saw over a 55% fall. Overall losses after tax for the period were also down over 50%. This shows that although Q1 results may have hindered HY figures, as restrictions have lifted during Q2, we have seen an improvement in IAG’s performance. This provides me with optimism for future performance as, if more restrictions ease globally, volumes of passengers should rise. If so, the share price will more than likely follow suit, which means IAG shares at the current price could provide a great opportunity for me.
Although it may be a while before we see full passenger capacity, the firm is taking steps towards it. The expected passenger capacity for Q3 is 45% of 2019 levels, a healthy increase on the 22% for Q2. This will massively boost revenues. I must note, however, that this is lower than some competitors have set out, highlighted by my fellow Fool G A Chester.
A reduced capacity compared to competitors could be offset by the latest easing of restrictions. I say this because, for British Airways, which is owned by IAG, flights between the UK and US have historically been the most profitable. This means a ramping up of these flights should help recovery. With this said, the US is not yet accepting travellers from the UK or large parts of Europe, which could impact the volume of this flight path.
Is IAG a buy?
There is no doubt in my mind that long term, IAG will recover. Therefore, as a long-term investor, this could be a real opportunity. With the IAG share price currently at a fraction of pre-pandemic levels, I could argue that this is a buy. However, there are a few issues. Most notably, the pandemic will have long-lasting impacts on IAG – a standout being the level of debt it finds itself with. I would like to see how IAG performs for the rest of this year as we hopefully see more flight paths reopen. As such, I intend to keep IAG on my watchlist until then.
Markets around the world are reeling from the coronavirus pandemic…
And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.
Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…
You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.
That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.
Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.