With worldwide infections dropping, is it safe to buy IAG stock right now, or should you flat-out avoid it? One way to answer that is to dig deeper into the company, and this page will help you just that. Here you'll find a complete guide for understanding IAG's business, revenue streams, and stock investment potential.
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Learn How to Buy IAG Stocks in 3 Easy Steps
Find a broker
You need to find a well-regulated broker and open a trading account so that you can access the financial markets and trade IAG shares.
Analyze IAG chart
From your trading account, you'll find a charting application where you'll be able to see IAG'S price movements. Use it to analyze how IAG is trading and find a good entry point.
When you've defined your entry and exit, you can now place your first trade.
IAG Company Overview
International Consolidated Airlines Group S.A. or plainly IAG is a Spanish-registered multinational airline holding company with corporate headquarters in London, England. It was one of the largest companies in the U.K. by revenue in 2019 and is most known for being the parent company of British Airways.
Some of its other wholly-owned airlines include Iberia, Aer Lingus, Sun Air of Scandinavia, Iberia Regional (Air Nostrum), BA CityFlyer, Iberia Express. It also owns 97.52% of Spanish low-cost airline, Vueling. All in all, IAG operates a fleet of over 533 aircraft and flies to 279 destinations.
Not unexpectedly, it was badly hit by coronavirus-related travel restrictions last year and has reported a net loss after years of being in profit. Its revenue in 2020 dropped to €7.8 billion ($9.32 billion) from €26.41 billion ($31.57 billion) the year before.
The company's CEO is Gallego, the former Chief Executive of Iberia.
IAG Business Model and Revenue Streams
IAG generates its income primarily from its subsidiaries of airline operating companies. These are, of course, derived from passenger revenues, which, in 2020, provided them with €5.5 billion ($6.57 billion), a 75.5% reduction from 2019.
The airline company that contributed the most passenger revenue in 2020 was still British Airways, with £2.8 billion. Iberia comes in at second with €1.16 billion, while Vueling is at third with €569 million, and Aer Lingus at the last place with €379 million.
IAG also generated revenue from 4,003 cargo-only flights in 2020. These flights were carried out for transporting vital equipment like PPE, ventilators, and COVID-19 test equipment. Some were also repatriation flights. However, the company doesn't operate dedicated freighters anymore, and these cargo flights were some of its immediate steps to diminish the pain from the pandemic last year.
History of IAG
IAG is the byproduct of a British Airways and Iberia merger in 2011, and shares began trading in London and Madrid. In 2012, the company created Iberia Express, a Spanish low-cost airline for short and medium-haul flights. And its deal to purchase British Midland Airways for £172.5 million was completed in the same year.
The following year IAG successfully acquired a majority stake in Vueling for €123.5 million ($160 million at that time). Before the deal, IAG already owned 45.85% of Vueling.
Two years later, it purchased the Irish airline Aer Lingus for €1.5 billion. And in 2017, it launched its new low-cost long-haul airline called Level, which started operating from Barcelona.
In 2019, IAG announced its plan to acquire Air Europa for €1 billion from Globalia. But due to what transpired recently, the deal was amended to €500 million in 2021.
Last year, IAG's stock shed 63.32% of its value from the start of 2020.
Brokers That Offer IAG Shares
Listed below are our top choices of brokers that offer IAG shares. We've reviewed each company, and we believe that these brokers have the right tools and platform that will help you trade IAG and other stocks successfully.
Should I Invest in IAG Stock?
A lot of IAG's investment worthiness has a lot to do with how the vaccine rollouts can bring the world back to the way it was -- without the virus. If restrictions remain in place this year and some countries still can't tame COVID-19, IAG may prolong its suffering. But then again, the company has done its part to keep afloat (cut 10,000 jobs and trimmed expenses) albeit still in survival mode.
The company still has some cash (€5.8 billion) to burn in another possibly unprofitable year, and with the slight uptick in travel activity, this year could offer it a less depressing bottom line.
Despite its drop in price people will still need to travel
IAG Stock Investment Potential
The company's stock is trading at a price not seen since 2013. From a technical perspective, it is nearing support (from the lows of 2014 and 2016) turned resistance at €2.54 a share. And historically, the price of IAG topped €5.78 at one point. Its LSE-listed shares exhibit a similar movement.
In terms of annual growth, IAG appreciated approximately at a rate of 6.58% in the past ten years, which can help forecast its investment potential. However, as mentioned, its fate depends on how quickly the industry recovers.
What Kinds of Investors Should Include IAG in Their Portfolios?
Investors who should include IAG in their portfolio must be prepared to take in the uncertainty caused by the present health crisis. IAG is still a great business with many profitable subsidiaries under its belt. However, it needs to survive this present obstacle for investors to see their investment pay off. If the whole situation does turn brighter, its current price offers enormous growth once the stock starts taking off.
How Much Should I Invest in IAG
Now that you have a good idea about IAG as a company and its investment growth potential, you'll be able to decide how much of your funds is best exposed in the stock. Of course, this decision is entirely based on your preference.
But for good measure, you should take into account your risk profile. In other words, you need to consider an amount you're comfortable losing just in case your investment goes south.
This is because of the greater risk in investing in individual stocks. That's why most investors keep their exposure in stocks diversified.
How to Buy Shares in IAG Stock?
As touched on earlier, a brokerage account is your ticket to trading IAG stocks. So, when you initiate the process of opening an account, you'll typically be required to submit an application form online along with some supporting documents. Upon receiving your application, brokers will usually need a few days to approve it.
When your account is approved, the next step is to fund it. Brokers have their available funding methods, so you only need to choose the one that's suitable for you. Normally, brokers offer these deposit options: electronic bank deposits, wire transfers, check, and account transfers from another firm.
The processing time of your deposit will vary from a few minutes to a couple of days. If you want the funds to reflect in your account instantly, choose electronic bank transfers.
And finally, once it appears in your trading account's balance, you can proceed with placing your first IAG trade.
Buy IAG Shares Using a Broker
As mentioned, sometimes brokers need more than 24 hours to approve your account because they need to verify some important details in your application and supporting documents.
First, they need to ascertain that it is actually you who's opening an account, so they will check the identity documents you provided. Usually, the acceptable proof identity documents include Tax Identification Number (TIN), Social Security Number (SSN), passport, and driver's license.
In addition to that, brokers will also review all the other information you provided, such as your annual income, net worth, investment objectives, risk tolerance, employment status, and occupation.
Brokers request all of these from you to comply with certain rules and regulations. They need to ensure that they follow anti-money laundering policies, anti-terrorist financing requirements, tax laws, and record-keeping procedures.
Buy IAG Shares With a Direct Stock Purchase Plan (DSPP)
A Direct Stock Purchase Plan or DSPP is an alternative way to purchase shares. This method enables you to buy shares directly from the company without the need for a broker. With this method, you don't incur a fee per transaction but instead, pay an initial setup fee and put up the initial investment requirement.
IAG offers a Dividend Reinvestment Plan, wherein the cash dividends it receives from IAG are invested directly into new shares. If you're interested in this, you have to send an application online to IAG.
Frequently Asked Questions
IAG's stock price looks to make a rebound this year after its freefall last year due to the pandemic, with plenty of analysts maintaining buy ratings for the stock.
IAG was a consistently profitable business, but last year's pandemic travel restrictions caused it to report its first net loss in years.
Yes, it is possible to profit from trading IAG stock due to its sufficient short-term trading volume and volatility.
Trading IAG shares would need a trading platform with complete technical studies to have a thorough understanding of its price movements.
IAG's trading hours are between 3 am to 11:30 am ET for the two exchanges where it is listed on.
IAG is listed on Bolsa de Madrid (BMAD) and the London Stock Exchange (LSE), both under the symbol IAG.