It is better to travel than arrive’ could be a neat tagline for British Airways owner International Consolidated Airlines – talking up the pleasures of air travel – instead, this stock market truism was underlined as shares in the company descended despite unveiling its first annual profit since the pandemic.
AJ Bell’s Russ Mould said: “Up more than 60% from its late September lows before today the stock had already enjoyed an extraordinarily strong run and while the latest results were encouraging there are areas of concern for investors.
“As a legacy of Covid, debt is highly elevated. This could make the market uncomfortable, particularly if there is any indication it is preventing IAG from making necessary investments in its business.
“The pledge to return to pre-Covid levels of profit in the next few years gives investors something to look forward to but also demands some patience – and there is no dividend to reward shareholders for sticking around.
“The purchase of the remaining Air Europa stake implies the company is not too constrained despite its hefty borrowings, and its brand power and the resilience provided by its size and longevity in the market should leave it well placed to benefit from a shake-up of the sector as less durable rivals are permanently grounded.”