British Airways share value

The Times on Saturday (2 October) ran a fascinating article on the share price (and ultimate value) of British Airways’ owner International Consolidated Airlines Group (IAG).  For brave investors travel shares are an enigma.

Written by Jessica Newman she told readers that Deutsche Bank was suggesting to clients to buy the stock.  Analysts at the German bank saw the “near-term risks increasingly skewed by the upside” and added that the stock’s price and the fact that the United States had set out plans to ease its entry requirements next month served as a “much better backdrop for the shares to kick on from here.”

Travel has suffered during the pandemic. IAG share price fell to its lowest level in October last year, just above 80p. At the same time, it launched a $2.5bn rights issue to help to strengthen its finances, which the analysts said meant it would emerge from the pandemic with “higher financial leverage”. Deutsche Bank has a 220p price target on the stock.

TUI, Europe’s biggest travel group, ended the day up 17½p, or 5.5%, at 339½p; easyJet climbed 41p, or 6.2%, to 703¾p and Wizz Air jumped 200p, or 4%, to £52.14. Rolls-Royce, the aircraft engine maker, advanced, too, rising 2¾p, or 2%, to 142¾p. SSP, which operates food outlets at railway stations and airports and is another likely to benefit from the change in American rules, rose by 20½p, or 7.4%, to 297½p.

Hotel groups benefited as well, with Whitbread, the owner of Premier Inn as well as the Beefeater and Brewers Fayre brands, gaining 90p, or 2.7%, to £34.06, and Intercontinental Hotels Group adding 169p, or 3.5%, to £49.25.

www.iairgroup.com

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