Is the IAG share price about to hit turbulence?

After flying through the coronavirus pandemic storm, it looked as if the IAG (LSE: IAG) share price was on track to hit clearer skies in 2022. 

Unfortunately, it is starting to look like the group is heading towards another patch of turbulence. This is clouding the company’s outlook and making it harder for me to assess whether or not this enterprise can claw back some of the losses it booked throughout the pandemic in the year ahead. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

IAG share price threats 

The IAG group is made up of a collection of airlines, including British Airways. All of these companies, excluding BA, are located in Europe, which might become an issue for the group. Under EU rules, airlines operating out of the region have to be majority-owned by EU domiciled businesses.

As the UK is no longer part of the EU, and negotiations to remedy this issue are going nowhere, there is growing speculation that IAG could be forced to divest BA and re-domicile in Europe. 

It is difficult to understand how such a change would impact the group. BA operates some of its most lucrative routes across the Atlantic. These provide valuable cash flow for the rest of the business.

IAG works because it can use economies of scale to push down costs and increase synergies. If it is broken up, it is impossible to say what sort of impact this will have on the individual businesses. 

At the same time, the company has to fight off increasingly aggressive competitors. Low-cost peer Ryanair recently announced that it would be rolling out significant discounts on its flights to encourage consumers to return to the skies. This challenge could draw IAG into a fare war. That is the last thing the corporation needs. 

These are the biggest challenges facing the IAG share price today, but the company also has plenty of opportunities. 

Opportunities on the horizon

The global aviation market is recovering from the pandemic. There have been some bumps along the way, but the overall trend suggests consumers are returning to the skies. 

It also looks as if countries are rolling back travel bans. Research shows these have been relatively ineffective against containing the spread of the highly contagious coronavirus. 

These themes suggest that the company does have some tailwinds behind it that should help support its recovery in the months and years ahead. City analysts believe the enterprise will almost break even this year, based on current trends. That could be a strong positive for the IAG share price. 

Even a modest improvement in this forecast could see the company return to profit, which would almost certainly improve investor sentiment towards the business. 

However, even after considering these favourable factors, I think the outlook for the enterprise is incredibly uncertain. As such, I would not buy the stock for my portfolio today. I would rather wait to see how the operating environment develops over the next 12 months. 

Our 5 Top Shares for the New “Green Industrial Revolution”

It was released in November 2020, and make no mistake:

It’s happening.

The UK Government’s 10-point plan for a new “Green Industrial Revolution.”

PriceWaterhouse Coopers believes this trend will cost £400billion…

…That’s just here in Britain over the next 10 years.

Worldwide, the Green Industrial Revolution could be worth TRILLIONS.

It’s why I’m urging all investors to read this special presentation carefully, and learn how you can uncover the 5 companies that we believe are poised to profit from this gargantuan trend ahead!

Access this special “Green Industrial Revolution” presentation now

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

This post was originally published on Motley Fool

Financial News

Daily News on Investing, Personal Finance, Markets, and more!