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IAG Share Price Pattern Points to a Breakout After Earnings

The IAG share price is the spotlight after the British Airways owner reported relatively weak first quarter results. The stock is down by more than 1% and is in the same range it has been in the past few sessions. 

What happened: IAG had a bad quarter, as the airlines industry continued to struggle. The company made more than 968 million euros as the industry made a slow recovery. This was a lower number than more than 4.5 billion euros that it reported in the same quarter last year. It also made a loss after tax of more than 1 billion euros. 

At the same time, its total debt has risen from more than 9.7 billion euros in the first quarter to more than 11 billion euros. In a statement, the company’s CEO said:

“We’ve acted decisively to build resilience by boosting liquidity and reducing our cost base. At March 31, the Group’s liquidity increased to €10.5 billion which demonstrates IAG’s good access to capital markets. Cargo has enabled us to operate a more extensive passenger longhaul network”

Why it matters: Most global airlines have started to see some growth as travel resumes. The ongoing vaccination efforts have led many investors to start predicting that the sector will rebound later this year. 

However, there is limited chances that many airlines will go back to profitability anytime soon. Furthermore, many experts believe that the industry will go back to pre-pandemic levels in about two to three more years. Still, the IAG share price will likely do well because of expectations of growth and the fact that the firm has boosted its balance sheet.

IAG share price forecast

On the four-hour chart, we see that the IAG share price has been in a consolidation mode recently. The stock has formed a symmetrical triangle pattern that is shown in blue. This pattern usually signals that a breakout is about to happen. The stock has also remained above the 23.6% Fibonacci retracement level. It is also slightly above the 25-day and 50-day moving averages. 

Therefore, since this triangle pattern came after the stock rallied, there is a probability that it will break out upwards in the near term. Nonetheless, a drop below 200p will invalidate this trend.

Please don’t consider this investment advice. Views expressed here are those of the writer and the writer and InvestingCube will not be held liable for any losses.

IAG stock chart

IAG share price

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