International Consolidated Airlines Group SA (LSE:IAG), which owns British Airways, is set to provide a keenly awaited update on its post-covid recovery tomorrow, with its shares up almost 30% since the start of 2023 but still below where they were 12 months ago.
British Airways said in early February it would be reopening routes to mainland China in April, marking a large step in the group’s recovery after the pandemic grounded the flights for three years.
IAG has been edging towards a return to pre-pandemic passenger figures, reporting steady improvements from being 41%, to 18.8% and 14.5% shy of 2019 numbers in the first three quarters of 2022.
The Anglo-Iberian airline group is still only in the “early stages of recovery,” according to Liberum analyst Gerald Khoo, who said there was growth "headroom" this year, subsequently raising his price target from 145p to 220p.
Deutsche Bank also feels this year is set to be “much better” for airlines than had been envisaged at the end of last year, on the back of a strong resurgence in demand and China's reopening.
Adding extra intrigue, there was also some cheeky speculation from Ryanair’s boss in January that IAG could bid on low-cost carrier easyJet.
Airline stocks have rallied in 2023, with Ryanair and IAG both up close to 25% respectively, lagging the rocketing easyJet and Wizz Air, both around 42% higher.
Positive sector news came in the past week from Heathrow, BA's main base, which reported more than double the number of passengers flew from the airport in January, just 10% shy of the number seen in 2020.
It added waiting times were also nearing pre-covid levels, despite strikes and ground crew shortages last year, likely bringing relief for airlines which faced a cap on flights as a result.
IAG reported an operating profit of €770mln for the first nine months of 2022, compared to a loss of €2.5bn in the same period in 2021, which was hit by travel restrictions as a result of the pandemic.
It said it aimed to meet 78% of pre-pandemic demand for the full year, eyeing 87% of 2019 footfall in the fourth quarter.