International Airlines Group (IAG), like all airlines, was hit hard by the pandemic. However, its share price recovery has seemed slower, with the stock still trading below the 200p mark.
But with Spirit Airlines recently stating that US demand is shifting towards long-haul international travel, are IAG shares now one to consider for investors?
The company is certainly well-positioned to benefit. Here’s why:
The British Airways Benefit
IAG’s British Airways airline is a prominent player in flights between the US and the UK.
In fact, the website Simple Flying said, “British Airways is the king of the transatlantic market, accounting for over 35% of all US-UK flights.”
In addition, British Airways is the leading carrier for the lucrative route between New York and London. In 2019 (pre-pandemic), it was reported that British Airways’ New York to London Heathrow flight brought in over $1 billion, the most of any other airline route.
Even without the NY-London route, IAG and BA boast an expansive global network that reaches far and wide.
US to Europe On the Rise
Considering the ripple effect of Spirit Airlines’ revelation about US passengers embracing long-haul international travel, the question becomes, has Europe been the go-to place for Americans this summer?
Americans do love their trips to the UK…
And in 2022, visitor numbers from the US surpassed pre-pandemic levels, with some 4.56 million US visitors in 2022, a 2% increase over 2019. With Spirit stating the hunger for international travel has increased this summer, that should bode well for British Airways.
Furthermore, American visitors to Europe are expected to have risen by 55% this summer, another positive point for BA and IAG’s other carrier Iberia.
Inter-European Travel
While IAG will benefit from its transatlantic routes, the company is also positioned to pounce on travel trends within Europe as well.
US travellers flocking to Europe generally like to visit more than just one place, and IAG’s Vueling airline seems to have also seen a boost in travellers.
Of course, there is no way of knowing for sure, but according to Google Trends, searches for Vueling are currently up 13% year-on-year. In addition, visitors to the carrier’s website are still hovering near all-time highs.
What’s more, Aer Lingus, another under its banner, also navigates the European skies.
Conclusion: In a world eager to embrace post-pandemic international travel, IAG’s broad reach in the US and Europe could translate into impressive revenue growth this year.
For us, IAG is a frontrunner among London-listed airline stocks (something we have said for a while). Of course, we have to consider the risks, and IAG’s debt pile is one.
However, with its global reach and potential to capitalize on the resurgence of long-haul international travel in the US, IAG presents a compelling case for investors looking to ride the wave of aviation’s resurgence.
By Sam Boughedda