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Uncertain outlook sees The Share Centre downgrade International Consolidated Airlines
•International Consolidated Airlines battles against growing economic headwinds
•Medium term outlook seems uncertain
•The Share Centre now recommend investors ‘hold’ International Consolidated Airlines
Sheridan Admans, investment research manager at The Share Centre, explains why International Consolidated Airlines has been removed from our ‘buy’ list.
“Results issued by International Consolidated Airlines Group, formally known as British Airways, have not been too bad so far this year, considering the economic headwinds the industry faces. Investors are likely to be pleased the group has spent time building financial projections up to 2015 in the hope of paying a dividend in the future.
“However, in the shorter term, the economic headwinds seem to be getting stronger. Companies, such as Thomas Cook, are issuing profit warnings due to a decrease in orders and a rise in the price of oil, meaning we struggle to see a catalyst to drive the share price higher.
“In November International Consolidated Airlines Group announced the acquisition of British Midlands Airways BMI with a price tag of 478.7m. This will prove a challenge to turnaround as the airline has been struggling to make profits for some time.
“We have downgraded International Consolidated Airlines Group and now recommend investors ‘hold’ as the medium term outlook seems very uncertain. Weakening global growth, austerity, possible debt contagion in Europe, stubbornly high fuel costs and rising level of Air Passenger Duty could weigh on investor sentiment and impact profit margins.”
THIS DATA IS PROVIDED BY THE SHARE CENTRE. THIS IS NOT INTENDED TO CONSTITUTE AN OFFER OR AGREEMENT TO BUY OR SELL INVESTMENTS.
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Back2011-11-29 12:52:17 © Moneyextra.com