IAG reported a solid Q1 2023 with the airline expecting to operate at 97% capacity of 2019 levels.

British Airways owner, International Consolidated Airlines Group S.A., often shortened to IAG, reported Q1 2023 earnings last week. The airline made note that European leisure, USA, and Caribbean demand was good, but tech-industry-related destinations saw lower demand still. IAG also saw 1.2m new loyalty customers enrolled onto Avios. Forward guidance was strong with IAG expecting 97% capacity vs 2019 levels but stressed that fuel prices, consumer confidence & strikes at Heathrow, and French ATC are their biggest uncertainties.

Financials

Q1 earnings on Friday gave investors a nice relief because of strong forward guidance for the summer as well as a beat on analyst estimates. Companies’ Forward guidance this quarter seems to have proved more important than actual published numbers as investors are looking for signs that businesses are expecting sustained revenues and profits given the inflation uncertainty and cost of living across the globe. Looking at Q1 numbers, total revenue was €5.889bn (+71.4% higher YoY), with an operating profit of €9m, but a net loss of €87m. Cash on hand grew to €11,369bn (+18.4% YoY) with borrowings down -1.1% to €19,767 (from €19,984). The bulk of IAGs revenue came from passenger flights with the biggest cost being fuel & oil costs at €1.758bn for the first 3 months of 2023. They also paid €274m in finance charges, hence the net loss.

Technicals

Looking the technicals IAG currently holds support dating back to the 4^th of October 2022, a break of this trendline would be needed to negate the current bullish momentum. Currently, this level is around £1.45p. MACD is also accelerating to the upside with RSI reading 59.8, suggesting a neutral stance. Towards the upside, the 2023 high at £1.73 would be the first level of resistance followed by 23.6% Fibonacci level at £2.06. A break above here sees IAG aim for £2.85, but this level could take some time as investors will likely want to see how summer demand will look post-covid.