IAG Share Price is at Risk of a Major Meltdown

The IAG share price has been under intense pressure in the past few days. The stock has fallen in the past four straight days and is hovering near the lowest level since February this year. The shares have dropped by almost 30% from their highest point this year.

Business travel to take longer 

IAG, the parent company of British Airways, is mostly known for its business travel. This is in contrast to other companies like EasyJet, Wizz Air, and Ryanair that mostly serve tourists. The company is also well-known for its long-haul flights. 

Therefore, the company has struggled more than its peer companies. Besides, business travel has remained at a substantially lower level. 

And there is a likelihood that business travel will not rebound any time soon. For example, in an interview last week, HSBC Chief Executive said that he expects that the company will slash its travel budget by about 50%.

This trend presents significant challenges for IAG considering that business class customers are usually its biggest profit-makers. Therefore, while demand from tourists and other casual travelers will remain, the overall pricing will be significantly lower.

IAG understands this. And this is likely the reason why the company is planning to launch a new short-haul service, commonly known as British Airways Lite. Still, there are concerns about how fast the company can launch the service and whether it will be able to compete with other players like Ryanair.

IAG share price forecast

The daily chart shows that the IAG stock has been in a strong bearish trend. It is now hovering near the lowest level in February. Indeed, it has struggled moving below this level three times before. It has also formed a descending channel pattern and moved below the 25-day and 50-day EMAs. 

Therefore, at this stage, the path of the least resistance is to the downside. This view will be confirmed if the stock manages to move below the 150p level. On the flip side, a move above the key resistance at 170p will invalidate the bearish view.

IAG share price