IAG Takes Off Since Brexit With A 14% Rise In Passenger Numbers in 2016

IAG trafficIAG traffic

Last year, IAG transported 100.67 million passengers (+14%) and improved its occupancy rate to 81.6%, (+0.2%), thanks to a good performance from its routes to Europe and North America. Two of the four airlines in the holding company, Aer Lingus and low-cost carrier Vueling, were the main drivers behind the surge in business.

According to Bankinter’ analysts it’s good news for the company for the following reasons:

  • It shows an improvement in the number of passengers who decided to use IAG instead of other airlines, in spite of it having been a particularly difficult year due to Brexit and terrorist attacks.

 

  • Vueling is one of the two airlines in the holding which has fuelled this improvement, suggesting that the operational problems of last summer have been resolved.

 

  • The recent acquisition of Aer Lingus has also contributed positively to the improved traffic figures. It is one of the cornerstones of IAG’s strategy for launching new low-cost longhaul routes (to the US) from Barcelona, in order to compete with Norwegian Air. It is looking at various possibilities: whether Aer Lingus will lead this strategic iniative or a new subsidiary will be created to avoid cannibalising Iberia’s business.

 

That said, there has been news that some congressmen in the US – with a democratic leaning – have asked President-elect Donald Trump to revoke the provisional authorisation granted to Norwegian Air to allow it to operate in the main US airports, defending the protectionist slant of his campaign.

For the time being, the authorisation remains valid and IAG remains confident about going ahead with its strategic move.

In short, Bankinter continue to have a positive view of IAG based on fundamentals and on its management.

Furthermore, after the sharp correction in the stock in the wake of the Brexit referendum, we believe it still has upside potential.