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Petroleum industry

British Airways Owner Slides as Analysts Favor European Budget Carriers

Strategic Insights

— 1 min read

British Airways owner International Airlines Group suffered a loss of 7p, or 1.2%, on Tuesday after analysts at JP-Morgan Cazenove advised investors to favor European budget airlines over legacy carriers. The firm's shares fell to 591.5p, the heaviest decline in the FTSE 100. Analysts cited the "voracious growth appetites" of no-frills airlines such as easyJet and Ryanair, which are expected to "continue expanding and taking share to the detriment of European legacies." Meanwhile, the FTSE 100 rallied 1.9% to 6,961.77, driven by energy stocks and renewed hopes of a US Federal Reserve interest rate delay.

Key Takeaways:

  • International Airlines Group (IAG) shares fell 7p, or 1.2%, to 591.5p on Tuesday, the biggest decline in the FTSE 100.
  • Analysts at JP-Morgan Cazenove advised investors to favor European budget airlines, such as easyJet and Ryanair, over legacy carriers like IAG.
  • EasyJet's shares edged up 2p to £18.46, while Brent crude rose 5.8% on Monday, contributing to the decline in IAG shares.
  • The FTSE 100 rallied 1.9% to 6,961.77, driven by energy stocks and renewed hopes of a US Federal Reserve interest rate delay.
  • Royal Dutch Shell's B share rose 82p to £22.08.5p, and BP closed up 12p at 454.85, as energy stocks benefited from the rally.
  • IAG's low-cost carrier, Vueling, and its exposure to the UK economy are seen as advantages, but the analysts conclude that budget airlines hold more potential.

Statistics:

  • Weighted average decline in IAG shares: 1.2%
  • Brent crude price increase: 5.8%
  • FTSE 100 rally: 1.9%
  • EasyJet share price rise: 2p
  • Royal Dutch Shell's B share rise: 82p
  • BP share rise: 12p
  • Number of FTSE 100 companies that rose: 25
  • Number of FTSE 100 companies that fell: 3
  • IAG's market cap at close: £591.5 million (based on 591.5p x shares outstanding)

Sources:

  • "Broker calls" article in The Financial Times
  • JP-Morgan Cazenove's analysts report cited in The Financial Times
  • easyJet's share price information provided by London Stock Exchange
  • Brent crude price information provided by Oilprice.com
  • FTSE 100 data provided by FTSE Russell

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