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Iain Gilbert Sharecast News
07 Dec, 2023 11:20

JP Morgan cuts IAG to 'underweight'

dl iag international consolidated airlines group iberia airbus a350 ftse 100 min
IberiaCompany photo / IAG

Analysts at JP Morgan downgraded British Airways parent company International Consolidated Airlines Group from 'neutral' to 'underweight' on Thursday as it turned "more cautious" on the sector.

FTSE 100

8,060.61

15:45 15/11/24
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FTSE 350

4,453.56

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FTSE All-Share

4,411.85

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International Consolidated Airlines Group SA (CDI)

240.80p

15:45 15/11/24
0.67%
1.60p

Travel & Leisure

8,607.27

15:45 15/11/24
-0.29%
-25.35

JP Morgan said its caution on the sector was due to the potential for large capacity increases to bring yields down against a backdrop of weaker economic growth.

"We generally forecast margins down; fuel/ex-fuel cost pressure is elevated, and unit revenues unlikely to grow," said JPM. "Balance sheets and valuations do not look overly stretched, however, earnings pressure could send stocks lower."

As a result, JP Morgan cut IAG to 'underweight' as it said it sees "potential profitability pressure" in 2024 due to unit revenue concerns from capacity growth.

Reporting by Iain Gilbert at Sharecast.com

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