IAG share price (LON: IAG) has failed to surge, although the British airline giant reported the first-ever profit since the lockdown. At the end of last week, the owner of British Airways reported an operating profit of €1.3 bn.
This was great news for the investors of International Airline Group, as the firm had to suffer a €10 bn loss in the previous two years. In 2021, the owner of multiple airlines reported a €2.8 bn loss which kept investors at bay.
In its latest announcement, the International Consolidated Airlines Group also forecasted an increase in profits in 2023. Due to lifted travel restrictions, traveling is coming back to normal. The firm also expects increased disruptions at Heathrow Airport as the number of passenger flights increases.
One concerning thing for many major investors is the increasing debt on IAG’s balance sheet. In 2022, the firm had €10.4 billion in debt on its balance sheet and €9.57 billion in cash. This translated into an €800 million net debt.
Nevertheless, this year IAG expects to post a profit of €1.8-€2.3 billion. The recent recovery in the firm’s revenue and operating profits is very positive but the IAG share price is still falling. The increase in profits appears to be offset by the increasing interest rates. On Tuesday, LON: IAG pair is expected to show increased volatility after closing at 156.5p on Monday.
A look at the LON: IAG chart shows that IAG stock has been trading sideways since the era of global lockdowns. Most of the price action has occurred in the 220p-90p range. Although IAG share price has retested the range low and range high multiple times but couldn’t break out.
The strengthening dollar and hawkish Fed are putting global equities in turmoil. This is one of the reasons why IAG shares have failed to rally despite a strong 2022. Due to the rise of the DXY index, FTSE is also having a minor pullback.
If FTSE doesn’t reclaim the psychological level of 8000 points in the coming days, then IAG stock will correct further. In such a case, the price can retest the 200-day moving average on the daily chart, which lies at 126.5p.
This post was last modified on Feb 28, 2023, 08:12 GMT 08:12