Renta4 | IAG has published the March air traffic data, which show a beginning to the year similar to the company’s capacity (supply) target for Q119, with demand growing slightly more than supply, and in line with the target for the year of 5.9%.
In R4, however, we believe the risk is on the downside, taking into account 1) that comparison will get harder over the course of the year, 2) macro slowdown, 3) overcapacity in the sector and 4) Brexit risks. Apart from BA (in line), both supply and demand data for the other airlines slowed in March compared to January and February, impacted by a more complicated comparative effect and that Easter was in March in 2018 rather than April this year, which will favour Q2 growth.
The number of passengers increased +5.7% compared to March 2018. In relation to supply: +4,4% vs March 2018 and by airlines: Iberia: +9,1%, Vueling -1,8%, Aer Lingus: +8,6%, British Airways (BA): +1,3% y LEVEL +163%. Demand +5,1% vs March 2018 and by airlines: Iberia: +9,5%, Vueling 2,5%, Aer Lingus: +9,8%, British Airways (BA): +1,6% y LEVEL +144%. with these data, the occupation coefficient rose 0.6 p.p. to 83,7%.
IAG has met its capacity growth target for Q119 after growing +6.1% versus Q118 while demand has grown slightly above 6.4%, positive for the evolution of prices. Capacity growth in Q119 is similar to the company’s expectation for the whole of 2019, even if we think the risk is on the downside. We do not expect a significant impact on the share price. Objective Price 8.3€. Overweight.