The IAG share price will be in focus on Monday after news that the European Union was considering halting any non-essential flights from the United States. The stock rose by more than 1.6% on Friday. This happened as investors reacted to news that the company was set to launch a discount carrier to boost its tourism business.
Aviation in focus
According to the Wall Street Journal, the European Union was set to recommend halting non-essential travel from the US to curb the spread of the Delta variant. In a statement last week, the Slovenian presidency recommended removing the country from those allowed to travel to the bloc. The members have also been deliberating on the move in the past few weeks.
This reporting is highly consequential to aviation companies like Lufthansa and IAG. This is because most of these companies make most of their money from the TransAtlantic route. While the UK is not involved in the deliberations, any such announcement will have an impact on British Airways. Besides, the company has many weekly scheduled flights from the US to key European countries.
Also, the report is consequential because the US is one of the most vaccinated countries around. Therefore, if the EU will ban non-essential travel from the country, there is a possibility that it will ban other countries.
Meanwhile, the IAG share price rose on Friday after reports emerged that the company was considering launching a discount carrier. This will make the company a key competitor to other popular carriers like EasyJet and Ryanair. This will help it to cushion its income now that business travel remains subdued.
IAG share price forecast
The daily chart shows that the IAG share price has been in a strong bearish trend in the past few weeks. Indeed, the stock has tumbled by more than 26% from its highest point this year. The shares have also moved below the 25-day and 50-day exponential moving averages (EMA) while the Relative Strength Index has been in a bearish trend.
Therefore, the path of the least resistance for the stock will be to the downside, with the next key support level being at 150p. On the flip side, a move above 170p will invalidate the bearish view.