IAG

What Next for IAG Share Price After the Air Europa Acquisition?

IAG share price is down by more than 1.25% becoming one of the worst-performing names in the FTSE 100 today. The shares are trading at 157.85p, which is slightly below the double-top at 178.25. 

What’s happening: In a report today, Reuters said that International Consolidated Airlines (IAG) had agreed to acquire Air Europa in a 500 million euro deal. That makes it the biggest European airline acquisition this year. The two companies had originally agreed a 1 billion-euros acquisition deal in November last year. The payment to Air Europa will be deferred to 2026.

Why this matters: IAG share price has been in a sharp downward trend this year. It has dropped by more than 60% making it the worst-performing FTSE 100 stock. It has also reduced IAG’s market cap to more than £7 billion. 

At the same time, IAG’s revenue and profitability have taken a beating since the virus has halted international travel. Therefore, the acquisition is a sign that IAG’s management is confident that the industry will recover as countries start rolling out a vaccine. 

What next for IAG share price: Analysts are generally optimistic about IAG’s stock. According to Marketbeat, the average price by analysts is 220p, which is a 40% increase from the current level. The most optimistic analysts are from banks like Deutsche Bank, UBS, Credit Suisse, and Sanford C.Bernstein.

Analysts estimates on IAG shares

IAG share price technical outlook

On the daily chart, we see that IAG shares have risen by more than 78% from the YTD low of 89p. The stock has found strong resistance at the 23.6% Fibonacci retracement level, where it formed a double-top pattern. 

The shares have also formed a parallel channel, resembling a bullish flag, that’s shown in red. Therefore, for today, the shares will remain in the current channel ahead of an imminent break-out to 227p, which is the 38.2% retracement level. 

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IAG shares chart

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