First-quarter results from British Airways owner International Consolidated Airlines Group SA (LSE:IAG) will be going up against very soft comparatives from 2021 when the airline industry was bemoaning global lockdown restrictions.
The industry is not out of the woods yet but there are clear signs of some pent-up demand, as confirmed by IAG’s chief executive Louis Gallego, who said at the time of the company’s full-year results in February that the group is confident “a strong recovery is underway”.
Bookings were said to have remained strong for Easter and summer 2022, having picked up in the New Year.
“We expect a robust summer with IAG returning to around 85% of its 2019 capacity for the full year,” Gallego said.
Having said that, the first quarter of the year is one in which the airline group would expect to post a seasonal loss in the best of times, never mind in a pandemic.
The company line in February was that IAG should be profitable at the operating level from quarter two, leading both operating profit and net cash flows from operating activities to be significantly positive for the year.
Elsewhere in the travel and tourism sector, InterContinental Hotels Group PLC should be telling a story of continued recovery in its first-quarter trading update, particularly in the US. The Holiday Inns owner saw “significant acceleration in signings” in the fourth quarter of 2021 and shareholders will be hoping that momentum will have been maintained.
The resurgence of Covid in China is likely to be a concern, however; the company added a net 12,863 rooms in Greater China in 2021 in the expectation that the worst of the pandemic is behind us.
Away from the FTSE 100 companies, Sir Martin Sorrell's digital advertising and marketing company S4 Capital PLC (LSE:SFOR) will announce its delayed full-year results.
The company delayed releasing the figures twice in March. Firstly it blamed COVID-19 issues at its auditor PwC and the second time it simply announced that the auditor firm would not be able to complete the work in time for the scheduled deadline. Needless to say, the shares fell sharply on these delays, wiping more than £1bn off its market value, so the confirmation of a new date seemed to have given investors some encouragement.
As it is the first Friday of the month, that means the market will be watching out for US non-farm payrolls and what these numbers will imply about further interest rate rises.
The market is expecting yet another healthy increase of 390,000 jobs, which would be down slightly from the previous month but still substantial.
The unemployment rate is expected to stay at the previous month’s 3.6%, just a touch above the 50-year low of 3.5% achieved before the pandemic, while the participation rate is expected to edge up one tick.
This, said analyst Marshall Gittler at BDSwiss, “will only confirm Fed Chair Powell’s contention that the job market is ‘extremely, historically tight’ and ‘volatilely hot,’ meaning that they can hike rates without fear of causing unemployment to soar to 10.8%, as it did under [1979-87 Fed boss Paul] Volcker.”
Citing renowned economics commentator, Sly Stone, Gittler said such evidence of an “extremely, historically tight” jobs market would scream “higher” at the rates market.
“The dollar in turn is likely to dance to the music and continue to follow rates upward.”
Significant announcements expected
Finals: CMO Group PLC (AIM:CMO), S4 Capital PLC (LSE:SFOR)
Interims: Numis Corporation PLC (AIM:NUM)
Trading announcements: Beazley PLC, Ted Baker PLC (LSE:TED), InterContinental Hotels Group PLC, International Consolidated Airlines SA
AGMs: BlackRock World Mining Trust PLC, CVC Credit Partners European Opportunities (LSE:CCPG) Ltd, InterContinental Hotels Group PLC, Man Group PLC (LSE:EMG), Rightmove PLC (LSE:RMV), Spirent Communications (LSE:SPT)
Economic data: Non-Farm Payrolls (US), Unemployment Rate (US), Consumer Credit (US), Halifax House Price Index (UK)