IAG Share Price Outlook: Reason Behind 40% Price Surge

Summary:
• IAG share price has been in a remarkable uptrend since October 2022. During this period price has surged by more than 87%.

Just like other Airline stocks, IAG share price is also showing positive price action over the past few months. A major reason behind this uptrend is the end of pandemic-induced restrictions and increased air travel. The ongoing rally also gained momentum through the positive price action in US equities.

The International Consolidated Airline Group S.A. has been struggling with profitability even before the pandemic hit. In 2019, IAG made a net profit of 1.7 billion euros. However, the company’s revenue during this period remained at 25.5 billion euros. This meant a net profit of only 7%.

As the pandemic hit, the IAG stock price tumbled a lot. The price has lost around 65% of its value since January 2020. This was due to the travel restriction imposed by most countries and the global lockdown.

According to the IAG financials, the company experienced 9.9 billion euros post-tax loss during the last 2 years. Another factor affecting the profitability of the airline industry is the rising fuel prices. The increase in airfare has adversely affected sales. Consequently, the International Airline Group ended September 2022 with 11 billion euros in debt. In a high interest-rate environment, such a high debt liability keeps most investors at bay.

IAG Share Price Daily Chart

On daily and weekly timeframes, IAG chart depicts a bearish accumulation. There appears to be a strong demand around 89p region which has acted as a strong support. Nevertheless, the price has shown a remarkable recovery in the past four months.

Since October 2022, IAG performance has been quite extraordinary. During this time, the stock price surged by more than 87%. At the time of writing, IAG share price is trading at 163p, and it has a market cap of 8 billion pounds. The price has recently also broken above the 200-day moving average and retested it successfully.

If the ongoing rally in US & UK equities continues, then the price could retest the 2021 high of 222 GBX. This would be a 36% price decrease from the current level. The upcoming CPI report is also likely to affect the AIG stock price action. Therefore, I expect high volatility during this week.