logo-loader
viewInternational Consolidated Airlines Group

British Airways owner IAG adds to its woes as Heathrow’s third runway ruled unlawful

IAG plunged further in the red after the ruling, but analysts say the court ruling may not have affected other airlines as much

International Consolidated Airlines Group -

British Airways owner International Consolidated Airlines Group PLC (LON:IAG) was a casualty as  Heathrow Airport’s expansion plans were ruled as unlawful.

The Court of Appeal said the government did not follow policy on climate commitments when it gave the green light to a third runway.

READ: Airlines become latest victims of coronavirus disruption

However, the judges added the project can go ahead if it fits with the country’s environmental pledges.

Heathrow Airport said it will appeal to the Supreme Court and it is “ready to work with the government” to fix the issues raised.

The government, instead, said it will not appeal and the project is only backed by the industry.

IAG tanked 9% to 509.2p on Thursday morning.

“Having their [IAG’s] key hub at Heathrow, that probably has some effect,” AJ Bell’s Russ Mould told Proactive. “It probably will be a big deal.”

Asset manager Sarasin & Partners said the decision is "game-changing" as governments are increasingly being held accountable for their commitment to the Paris Agreement.

"We sold our holdings of Heathrow debt from our Climate Active strategy in 2019, due to the lack of a demonstrable commitment by the holding company," said Natasha Landell-Mills, head of stewardship at the firm.

"Investors putting capital to work in carbon-intensive activities risk bearing the cost of similar litigation and resulting stranded assets," she added.

British Airways’s sector mates were also having a bad day, with Wizz Air Holdings PLC (LON:WIZZ) and easyJet PLC (LON:EZJ) both down 8% to 3,402p and 1,064p, respectively, while Ryanair Holdings plc (LON:RYA) slipped 6% to €11.87.

READ: Coronavirus: easyJet leads the airline retreat after Italy goes into lock-down mode

But according to Mould, the ruling on Heathrow had little to do with the budget airlines, as they were mostly hit by increasing concerns on the coronavirus outbreak.

“As coronavirus reached Brazil for the first time yesterday, I think in every continent in the world except the Arctic and the Antarctic people are concerned,” Mould commented.

“We had President Trump yesterday talking about considering banning inbound flights not just from China but from other countries if the spread gets worse.”

--Adds comment--

Quick facts: International Consolidated Airlines Group

Price: 226.7 GBX

LSE:IAG
Market: LSE
Market Cap: £4.5 billion
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Electric vehicle sales to accelerate following coronavirus pandemic

Roskill analyst Jose Lazuen tells Proactive London's Andrew Scott severe falls were expected in EV sales but that European and Chinese policies coupled with consumer preferences have shown them to remain strong. He adds that policy is going to favour and push EV sales in certain jurisdictions...

2 days, 9 hours ago

3 min read