IAG's market value falls sharply after latest Spanish announcement

June 28, 2021 14:30

At the beginning of this month, we commented that the European tourism sector was waiting on an update to the green list of the United Kingdom in view of the upcoming summer holiday season. Last week, a decision was finally made, as the UK government added the Balearic Islands to the list of safe destinations for its citizens, subsequently offering encouragement in terms of the movement of tourists.

This optimism has been short-lived because, as announced this morning, the Spanish government will require negative PCR test (taken within the past 72 hours) or evidence of a complete vaccination certificate to citizens of the United Kingdom who decide to travel to Spain for their holidays.

This news has been very badly received by the main airlines of both countries, since the holding company formed by British Airways and the Spanish Iberia lost more than 5% in the stock market losing €2.10 per share.

IAG has been one of the companies that has best weathered the storm over the previous few months, thanks to the significant volume of liquidity that it had during the past year. This was in part due to its good position in the sector and the capital increase that it carried out during the month of September. However, its stock market price is still quite punished, despite the good future prospects, thanks to the good pace of vaccination, although the decisions taken by both the British government and the Spanish government are not favoring the definitive takeoff of this company.

If we look at the daily chart, we can see how this company, after marking lows, began an uptrend that has led it to perform two strong sideways patterns of similar price consolidation after experiencing a strong rebound.

The first of these side ranges was surpassed last February, where the price was finally able to overcome the high band of that channel, after exceeding 200 GBX per share and its average of 200 sessions. Following that move, the price again began another sideways move between the March highs and an area near the upper band of the previous channel acting as the main support level.

These sharp declines are leading the price to fight for the lower band of this second side channel, so the loss of this important support level could trigger a new wave of shorts on this instrument.

For the moment, we will have to wait for the measures that are announced by both countries, but a clear upward trigger could be the possible inclusion of the rest of Spain, including the mainland, and new countries to the green list of the United Kingdom in the next revisions of the green list and the advanced vaccination process.

Source: IAG daily chart of Admiral Markets’ MetaTrader 5 platform from March 6, 2020 to June 28, 2021. Held on June 28 at 12:30 p.m. CEST. Note: Past performance is not a reliable indicator of future results or future performance.

 

Evolution of the last 5 years:

  1. 2020: -61,40%
  2. 2019: 1,20%
  3. 2018: -5,07%
  4. 2017: 47,65%
  5. 2016: -27,78%

 

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