Reply To: IAG a House of Cards?

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VintageKrug
Participant

I would certainly avoid airline stocks; they are volatile in the extreme.

However, the £5 you quote was a level reached – for less than a couple of weeks – by Willie Walsh’s management team, just prior to the Crash of 2008/9. It had risen from 330p (around the same levels as seen today) the year prior to that.

Choosing to take an exceptional, pre-crisis long term high as the benchmark doesn’t really help shore up an argument.

You can hardly criticise a pretty impressive turnaround from an almost bankrupt entity at the time of the cabin crew strikes.

Alongside the profitable performance of BA, the purchase of bmi, vueling and interest in flybe are all compelling reasons for a positive view of IAG.

The huge potential of the basket case that is Iberia coupled with IAG management’s track record of turning round failing airlines like BA and recent evidence of its abilities at the much smaller bmi, suggest that Iberia will deliver the expected profits in the long term.

IAG is hardly responsible for the poor performance of the Spanish economy, and indeed getting Iberia right will deliver much needed economic stimulus to the whole region and prove a test-case for the reforms much of Spanish economy needs to become lean and profitable once again, after years of EU-induced malaise.

The turnaround programme at Iberia is only just beginning and is already reducing costs for the Group.

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