British Airways owner International Consolidated Airlines Group SA (LSE:IAG) could well be on a heading for peak profits as headwinds strengthen, UBS analysts have said.
Macroeconomic pressures from sluggish UK growth, to Budget-related measures hitting affluent travellers, to tariffs impacting North American demand were flagged by UBS.
Despite IAG’s medium-term capacity growth target of 2% to 4%, UBS said it would become increasingly dependent on cost control and pricing to grow profit.
“Should profit growth slow, we could see lacklustre share price performance,” the bank added, as a ‘neutral’ rating was reiterated.
IAG last week reported a 2.9% increase in pre-tax profit to €2.7 billion for last year and unveiled a €1 billion buyback as demand was said to have remained strong.
Shares had surged in response and sat at 324.36p as of Thursday, with UBS also upping its price target from 280p to 320p after the update.