Is the British Airways parent a good buy?

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It is often said that the easiest way to become poor is to invest in airline stocks. This turned out to be true for British Airways’ parent company. IAG’s stock price has crashed more than 78% in the past five years. Other airline stocks like EasyJet and Wizz Air have also slumped in recent years.

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IAG still faces challenges

IAG, the parent company of British Airlines and Iberia, has had a difficult performance in recent months due to concerns over the company’s takeover. The biggest challenge facing the business is that its cost of operation has increased. At the same time, soaring airfare prices are preventing some people from traveling.

Still, the company has some catalysts that could push it higher in the near term.

First, this week Heathrow Airport announced that it would lift a cap put in place a few months ago. The cap limited the number of daily passengers departing from its terminals to 100,000 per day. The airport said the measure was necessary because of the severe staff shortages the company suffered during the chaotic summer period.

Second, it is likely that IAG’s British Airways will not cancel the 10,000 flights planned over the winter. The company has managed to ramp up its operations over the past few months. Heathrow’s announcement and a possible one from Schiphol could lead to increased demand for the company.

IAG stock price prediction

The daily chart shows that IAG’s stock price has been on a strong downtrend over the past few months. During this time, the stock has formed a descending channel which is depicted in green.

Last week, the stock formed a small hammer pattern on the lower side of this channel. Historically, a hammer is usually a bullish signal. The stock moved between this channel. It remains below the 25 and 50 day moving averages.

Therefore, the stock is likely to continue falling as long as it remains below both moving averages. If that happens, a drop below the important support at 90p is possible.

IAG share price
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