The IAG group, which includes the airlines British Airways, Iberia, Level, Air Lingus and soon to Air Europa, has lived a heart attack 2020.
The abrupt fall in flights is summarized in losses last year of 6,923 million euros, ranking at the forefront of the major affected by the Covid-19 pandemic, along with hotels and other tourism companies.
As a clear candidate for recovery when normality returns to airports, IAG has risen 33% this year, placing almost 2.4 euros a share, after falling to a minimum below the euro in September.
The opening of flights announced in Great Britain for next May 17 has spurred the price in a rally that has already eaten much of the expected increase.
Since the beginning of February, and until this Thursday, the value shot up more than 55%.
On Friday it caught the generalized correction in the sector and fell 5.77%.
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The movements of its managers have been aimed at obtaining financial resources to avoid a situation of collapse.
In September it carried out a capital increase for more than 2,700 million euros, which was attended as a shareholder by the Sociedad Estatal de Participaciones Industriales (SEPI).
Its main shareholder, Qatar Airways, which owns 25% of the capital, also attended.
In addition, the airline has received £ 2 billion loan commitments from the British public UK Export Finance (UKEF) and has deferred payment of £ 450 million to the British Airways pension fund.
With all this, IAG accumulates a liquidity of 10.3 billion euros, which for Bank of America analysts "is enough to cover about 18 months, according to our estimate of the cash outflow for the fourth quarter of 2020."
At the same time that the liquidity obstacle was overcome, the company undertook cost reduction plans.
It carried out a workforce reduction process of up to 13,000 workers at British Airways, while benefiting from Spain's ERTE in Iberia.
And in the midst of this severe crisis, IAG's purchase of Air Europa was reduced from the expected 1 billion euros to 500 million, deferring the payment for a period of 6 years.
And in addition, Air Europa also had the support of SEPI.
In this intense process, IAG has even undergone a change of president: Antonio Vázquez left his post to Javier Ferrán last January, after nine years in command.
Bank of America advises to buy the stock and highlights better liquidity and debt than expected with the year-end data.
“It is well positioned to benefit from a recovery in travel demand and has the potential to gain market share on transatlantic routes.
IAG is on our lists of best ideas from Europe ”.
Iván San Félix, Renta 4 analyst, highlights its liquidity position and adds that the maturity of the debt in 2021 is not demanding, with 407 million euros, while expecting a reduction in weekly cash consumption to 185 million in the first quarter of the year from 215 million in the fourth quarter of 2020.
Bankinter analyst Pilar Aranda points out three aspects that favor IAG's price: a rotation from growth sectors to more cyclical sectors;
the high level of solvency and liquidity of the group, and the consolidation of the sector in anticipation that the most fragile companies will disappear or reduce activity.
"We recommend buying IAG, but only for very dynamic profiles and with a long-term time horizon."
Credit Suisse experts give a potential of almost 10% over current prices.
"We maintain our overweight rating, although eagerly awaiting more clarity on restructuring plans, which we expect later this year when traffic begins to recover," they conclude.
Prices that will not return
Extension.
Crisis situations that are resolved with macro-capital increases of three new shares for every two old ones completely upset the historical price of the share, and this is what has happened with IAG, after the one carried out last September by which pocketed just over 2,700 million euros.
Capitalization.
The investor must therefore be guided by capitalization in order to see objectively how the company's valuation has changed.
The current market value of IAG does not reach 12,000 million euros, below the 14,382 million with which it closed the prepandemic year of 2019. Therefore, although positive, analysts remain cautious while waiting to see how the company once it integrates Air Europa and, above all, return to normal flights.
Actions.
IAG has gone from having 1,992 million shares in 2019 to 4,971 million since the expansion was carried out.
