International Consolidated Airlines PLC to become more competitive after
Peel Hunt upgraded the British Airways owner to ‘buy’ from ‘hold’ over lower risks of another equity raise
International Consolidated Airlines PLC () is expected to become “even more competitive” post-pandemic thanks to restructuring plans, said .
Analysts estimate the British Airways and Iberia owner to lead the industry in restructuring its cost base, while competitors struggle to, producing a more competitive business beyond the pandemic.
READ: British Airways owner IAG posts near €8bn loss
BA cutting employee costs by 30% surpasses legacy peers in terms of speed and ambition and lowers the bar to return to profitability, according to the bank.
A blend of continued premium leisure growth and cost-cutting can get close to restoring BA’s long haul margins, with premium leisure’s growth track record suggesting one year’s growth is enough to absorb a 10% loss of corporate traffic.
Credit Suisse expect operating cash flow margins to recover to at least 15%-18% levels over 2019.
Following last week’s interims, analysts forecast full-year underlying loss (EBIT) to come in at €2.5bn and maintained the ‘outperform’ rating with 228p target price.
Conversely, Peel Hunt upgraded the stock to ‘buy’ from ‘hold’ and raised the target price to 215p from 145p as it sees the risk of another equity raise diminishing.
“Bookings have increased sharply since the exit route announcement, with leisure bookings surging for both long-and short-haul summer destinations. We expect that to continue and be replicated in other countries as more people are vaccinated,” the broker commented.
Shares jumped 6% to 203.03p on Monday at noon.
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