It is often said that the easiest way to get poor is to invest in airline stocks. This has turned out to be true for British Airways parent company. IAG share price has collapsed by more than 78% in the past five years. Other airline stocks like EasyJet and Wizz Air have also crashed hard in the past few years.
IAG, the parent company of British Airlines and Iberia, has had a difficult performance in the past few months as concerns about the company’s recovery. The most important challenge facing the company is that its cost of doing business has surged. At the same time, the soaring airline ticket prices are hindering some people from traveling.
Still, the company has some catalysts that could push it higher in the near term
First, this week, Heathrow Airport said that it will lift a cap that went in place a few months ago. The cap limited the number of daily departing passengers from its terminals to 100k per day. The airport said that the measure was necessary because of the significant staffing shortage the company had during the chaotic summer period.
Second, there is a likelihood that IAG’s British Airways will not cancel the 10,000 flights it predicted during winter. The company has managed to ramp up its operations in the past few months. The announcement by Heathrow and a potential one from Schiphol could lead to more demand for the company.
The daily chart shows that the IAG stock price has been in a strong bearish trend in the past few months. During this time, the stock has formed a descending channel that is shown in green.
Last week, the stock formed a small hammer pattern at the lower side of this channel. Historically, a hammer is usually a bullish signal. The stock has moved between this channel. It remains below the 25-day and 50-day moving averages.
Therefore, the stock will likely continue falling as long as it is below the two moving averages. If this happens, a drop below the important support at 90p is possible.
This post was last modified on Oct 05, 2022, 08:30 BST 08:30