Renta 4 | Yesterday was Iberia Day, attended by senior executives from IAG and Iberia, who gave presentations.
Iberia is a success story of a restructuring process that began in 2012 and focused on three pillars: comprehensive transformation, leadership position in attractive markets and cost efficiency.
Iberia remains well positioned to continue gaining market share in its main markets (Europe-Latin America, Spain-North America, domestic market and Spain-Europe).
Management continues to see significant growth opportunities. It plans to invest €6 billion through the mid-2030s, of which 70% will be in aircraft (80% new).
The medium-term (3-5 year) objectives are: 1) capacity growth of 3%/5%. The strongest growth will be in long-haul, mainly on routes to Latin America and North America, 2) reduction in unit costs excluding fuel versus 2024 and 3) EBIT margin of 13.5%/15%. EBIT would thus grow from €1 billion in 2024 to €1.4 billion.
Madrid has become the second city in the world with the highest tourist demand, and Spain is the leading country in terms of tourist arrivals by air.
Strong growth in passengers from Latin America (>+90% vs 2019). The increase in passengers from Latin America is structural and sustainable. Madrid is the ‘new Miami’ and is attracting a large number of visitors, many of whom are staying to live, and business investment.
Aena has approved an investment of €2.4 billion to improve Barajas airport, 70% of which will be allocated to T4. This investment is intended to increase the airport’s capacity to meet growing demand and make Madrid a benchmark in the sector.
Assessment: Very positive messages from management regarding Iberia’s future growth and profitability prospects. Iberia’s restructuring since 2012 has been a success story and has positioned the company as the European leader in profitability, punctuality and passenger satisfaction. Iberia’s leading position and unique opportunities, with factors such as the sustainable flow of passengers from Latin America and Madrid as a major hub, will enable Iberia to continue growing profitably in the coming years. Latin America and North America will be the fastest-growing markets.
Target price: €4.55. OVERWEIGHT.
