IAG share price wavered on Friday, reaching a high of 437p, its highest point since August 24, up by 13.7% from its lowest point this month. This performance happened after the company published its financial results, which showed that its business did well in the third quarter despite the ongoing challenges.

IAG reported strong financial results amid rising energy costs

IAG, the parent company of British Airways, reported a mixed earnings report today, November 6. The report said that its revenue rose by 4.5% in the September quarter to €9.3 billion as demand remained steady and prices continued rising.

These gains were offset by the rising jet fuel prices, which were caused by the ongoing US-Iran war. IATA data shows that the average jet fuel price jumped to $191.54 last week, up by 3.8% from the previous month. It has risen by 112% from the same period last year.

As a result, the company’s operating profit dropped by 15.9% to €1.72 billion, while the profit after tax fell to €1.23 billion. On the other hand, the profit after tax fell by 12.2% to €1.23 billion

These numbers brought the nine-month revenue to €25.8 billion. This performance led to a significant decline in its profit metrics, with the profit after tax dropping to €2.2 billion. 

The company’s main challenge is that the cost of fuel is rising, with analysts expecting the prices to remain at an elevated level for a while. On the positive side, unlike its American competitors like Delta and United Airlines, IAG uses fuel hedges, which helps to offset the volatility in the market. It is now 45% hedged for next year and the management expects the annual fuel costs to be €8.9 billion. 

Most importantly for investors, IAG increased its dividends by 10% and is in the final stages of implementing the €1.5 billion buyback it announced earlier this year. IAG normally announces its annual buyback plans in the first quarter of the year. The CEO said:

“Our strong yield performance in all our markets reflects robust ongoing customer demand for travel for our airline brands. For the quarter, we have achieved an operating margin before exceptional items of 17.7%, despite the very high price of jet fuel and a number of one-off disruption events, clearly demonstrating the quality of our business.”

IAG share price technical analysis 

IAG stock chart | Source: TradingView

The daily chart shows that the IAG stock price has remained in a narrow range in the past few weeks. It has remained inside the key support and resistance level of 395p and 448p since July 16. 

The stock is consolidating along the 50-day and 100-day Exponential Moving Averages (EMA). It is also trading at the 38.2% Fibonacci Retracement level. Also, the stock has remained inside the lower and middle lines of the Andrew’s pitchfork tool. 

Therefore, there is a likelihood that the stock will remain under pressure, potentially to the support level of 400p.

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