Report
EUR 100.00
For Business Accounts Only
Revenues: The company believes that after the crisis it will have a stronger competitive position, as there will be fewer players-- not only because some have disappeared, but also because others are having a rough time. As for business travel, IAG thinks the segment will see clear recovery, although it is likely that in a normalised scenario starting in 2023 they could be -10%/-15% below 2019 levels. This would be offset by more Premium Economy clients. The main scenario is to reach normalisation in 2023 (vs. -15% capacity in 2023 vs. 2019 BS(e)).
Costs: The company continues to promote the variabilisation of fixed costs, with an aim to become more flexible in the future to adapt to market conditions, and by 2023 unit costs could stand below 2019 levels. Thus, by 2023 the company expects the EBIT margin to return to pre Covid-19 levels, within a range of 12% and 15% (vs. 13% BS(e)).
Air Europa: The deal makes perfect strategic sense. The key continued to reside in being able to generate enough synergies for the deal to make financial sense. In this regard, IAG continues to negotiate with the Govt., but it expects the talks to be fruitful.
MARKET IMPACT
Generally speaking, the comments are in line with our view that once everything is back to normal, the competitive environment will be more favourable for the airlines able to survive, thanks to the sudden concentration following Covid-19, which should aid unit revenues. Separately, the impact on business travel demand seems small, while the company has been able to lower the cost breakeven point thanks to the measures taken. With all this in mind, we will revise our estimates to include the better 4Q’20 than expected, and especially the lower cash outflows forecast.
IAG: VIRTUAL MEETING WITH THE COMPANY (ANÁLISIS BANCO SABADELL)
Highlights from our virtual meeting with the company today: Revenues: The company believes that after the crisis it will have a stronger competitive position, as there will be fewer players-- not only because some have disappeared, but also because others are having a rough time. As for business travel, IAG thinks the segment will see clear recovery, although it is likely that in a normalised scenario starting in 2023 they could be -10%/-15% below 2019 levels. This would be offset by more Premium Economy clients. The main scenario is to reach normalisation in 2023 (vs. -15% capacity in 2023 vs. 2019 BS(e)).
Costs: The company continues to promote the variabilisation of fixed costs, with an aim to become more flexible in the future to adapt to market conditions, and by 2023 unit costs could stand below 2019 levels. Thus, by 2023 the company expects the EBIT margin to return to pre Covid-19 levels, within a range of 12% and 15% (vs. 13% BS(e)).
Air Europa: The deal makes perfect strategic sense. The key continued to reside in being able to generate enough synergies for the deal to make financial sense. In this regard, IAG continues to negotiate with the Govt., but it expects the talks to be fruitful.
MARKET IMPACT
Generally speaking, the comments are in line with our view that once everything is back to normal, the competitive environment will be more favourable for the airlines able to survive, thanks to the sudden concentration following Covid-19, which should aid unit revenues. Separately, the impact on business travel demand seems small, while the company has been able to lower the cost breakeven point thanks to the measures taken. With all this in mind, we will revise our estimates to include the better 4Q’20 than expected, and especially the lower cash outflows forecast.
Underlying
International Consolidated Airlines Group SA
International Airlines Group is an international scheduled airline and global premium airlines. Co.'s principal place of business is London with significant presence at Heathrow, Gatwick and London City airports.
Provider
Sabadell
Francisco Rodriguez
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