We have entered the final stretch of April, with our eyes already set on the arrival of May and, with it, better weather in Europe. Looking forward over the coming weeks towards the summer months, many citizens are intently watching the evolution of the pandemic and the resultant measures imposed by European governments, waiting to find out if it will be possible to fly to their holiday destinations.
As we mentioned at the beginning of March, the arrival of good weather and vaccinations are breathing fresh life into the tourism sector, which has been hit hard by the pandemic. The viability of many companies has been put under scrutiny, leading airlines to trade at record lows due to the measures taken to curb their expansion at a global level.
These measures caused a drastic decrease in the number of flights and tourists last year, seeing only a brief respite during the summer months. This generated heavy losses in the airlines, causing giants such as Air France KLM to be forced to ask for public aid, leading to bailouts; or to carry out capital increases as in the case of IAG.
Although macroeconomic data are improving in the Eurozone as a whole and future prospects are no doubt better, the vaccination process in Europe has not started as expected. This has been largely due to the problems derived from the AstraZeneca and Janssen vaccines. With stoppages and delays in their administration respectively, a rebound in Covid cases has occurred and countries such as Germany are considering taking new measures until June.
IAG is one of the companies that has held up best in recent months thanks to the significant amount of liquidity it has had over the past year. This is partly due to its good position in the sector and the capital increase it carried out last September. Despite the problems with the vaccination process in Europe, in the United Kingdom, the process is much further advanced, which benefits the holding company formed by British Airways and the Spanish Iberia.
During the last year, it has been punished heavily, recording lows below 90 GBX. But after experiencing a recovery during the month of November the price has moved in a clear uptrend that has been interspersed with two sideways ranges thus fulfilling the bullish divergence that we could see in the weekly chart between the price and its MACD indicator.
Source: Admirals (Formerly Admiral Markets) MetaTrader 5 - IAG Weekly Chart. Date Range: 17 August 2014 - 26 April 2021. Date Captured: 26 April 2021. Past performance is not necessarily an indication of future performance.
If we focus on the daily chart, we can see that the first of these sideways ranges was overcome in February, when the price was finally able to overcome the upper band of that channel after surpassing the 200 GBX per share and its 200-session average. After that move, the price started another sideways movement between the March highs and the upper band of the previous channel acting as the main support level.
The bullish breakout of this new channel would open the door to a strong upward momentum that could take the price to levels not seen since last summer, thus confirming the change of trend.
Source: Admirals MetaTrader 5 - IAG Daily Chart. Date Range: 17 March 2020 - 26 April 2021. Date Captured: 26 April 2021. Past performance is not necessarily an indication of future performance.
Price evolution of the last five years:
- 2020: -61.40%
- 2019: 1.20%
- 2018: -5.07%
- 2017: 47.65%
- 2016: -27.78%
Air France-KLM Analysis
If we look at the daily chart of this company, we can see how, after falling to lows on 30 October, the price began an uptrend that led it to exceed its 200-session average, forming at that time a triangular consolidation formation that led it to mark highs at 5.90 euros per share.
Since then, the price has begun a correction in the form of a bearish channel that has taken it to the 38.2% fibonacci level after breaking below its 200-session average. It is important that we follow the behaviour of this stock and see if it is able to form a new upward momentum from its current levels, recovering its 200-session average that will lead it to break its current channel to the upside, since otherwise, the price could continue its declines to the 50% fibonacci level.
Source: Admirals MetaTrader 5 - Air France-KLM Daily Chart. Date Range: 8 January 2020 - 26 April 2021. Date Captured: 26 April 2021. Past performance is not necessarily an indication of future performance.
Price evolution of the last five years:
- 2020: -48.41%
- 2019: 4.68%
- 2018: -30.19%
- 2017: 162.47%
- 2016: -26.30%
If we focus on Lufthansa, we can observe that last year this company suffered a sharp decline from €15 per share in February 2020 to reach the annual low of around €6.80 per share. During the last quarter, and after the announcements from Pfizer and Moderna regarding their vaccines, the price started an uptrend following a channel formation, which led it to set annual highs in March and almost reach €13 per share.
Since then, the technical situation is very similar to what we have seen in Air France-KLM. The price started a correction following a bearish channel that has taken it to the 50% fibonacci retracement level. As with the previous case, we will have to keep a close eye on its evolution in the coming weeks and see if the price is able to overcome its current channel to the upside, as this breakout would open the doors to a renewed upward momentum to its annual highs.
Source: Admirals MetaTrader 5 - Lufthansa Daily Chart. Date Range: 8 January 2020 - 26 April 2021. Date Captured: 26 April 2021. Past performance is not necessarily an indication of future performance.
Price evolution of the last five years:
- 2020: -34.10%
- 2019: -16.70%
- 2018: -35.87%
- 2017: 150.36%
- 2016: -15.75%
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