The IAG share price has been under intense pressure in the past few days. It is trading at 132p, which is slightly above last Friday’s low of 121p. Other airline shares like EasyJet, Wizz Air, and Ryanair have also declined.
The IAG stock has crashed by more than 27% from its highest level in November. This decline happened as the market worried about the spreading Delta variant cases in some European countries like Netherlands and Austria. Indeed, Austria has already announced a lockdown.
The sell-off intensified on Friday after South Africa announced a new variant of the virus. This week, several countries like the United States and the UK have confirmed the entry of the Omicron variant. Subsequently, the Biden administration has announced more rules that will affect the aviation sector.
Therefore, the risk of the variant and lockdowns will likely prevent more people from flying. Also, many businesses will likely keep their workers at home in a bid to prevent them from being impacted by these rules.
In a statement on Thursday, United Airlines warned about the risks to the Transatlantic route. In a statement to Financial Times, Scott Kirby of United Airlines said that the company expects to fly less to and from Europe in December and January. While it has not cut flights, the company expects that customer numbers will be lower.
The United warning is important for the IAG share price because of the importance of the transatlantic route to British Airways.
IAG share price forecast
The two-hour chart shows that the IAG stock price gapped lower last Friday. This week, the stock has remained in a tight range as investors reflect on the variant. The current price is slightly below the resistance at 136.4, which was the lowest level in September this year. On the two-hour chart, the MACD has made a bullish crossover.
Therefore, I suspect that the stock will decline in the coming days as bears target last week’s low of 121p. This view will be invalidated if the price moves above 145p.