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Could it finally be time to buy IAG stock?

British Airways

There is little doubt about the fact that travel stocks have been the worst impacted of all shares because of the pandemic. And the recent arrival of the Omicron variant derailed whatever progress they had made in 2021 once again. One such stock is the FTSE 100 British Airways owner International Consolidated Airlines Group (LSE: IAG). Earlier this month, the stock touched its lowest level of 126p in the year. 

The IAG share price inches up

However, things have started to look up a little since then. At the last close, it was up 16% from these low levels. It is still significantly lower than the highs of over 200p seen earlier this year, but I think that there is some room for optimism here. In general, I think the stock market mood has been a little more buoyant recently as there has been no lockdown during the festive season with none planned at least until the New Year in England. The FTSE 100 index is in touching distance of 7,500 as I write on Wednesday. And a rising tide could well lift all boats, as they say.

Positives roll in for the FTSE 100 stock

There is more positive news too. British Airways is starting short-haul flights from London’s Gatwick Airport from March 2022 onwards. It will start with just three aircraft for the operation, but this will be ramped up to 18 by May. Such flights were stopped as the pandemic started and have not been resumed since. The fact that they are starting now, I would imagine, is a reflection of increasing normalisation of flying conditions. 

Also, one short-term positive is that IAG’s proposed takeover of Spain’s Air Europa has apparently hit a dead end. The acquisition was finalised in November 2019, just before the pandemic. Then the value of the deal was reduced during the global health crisis. It has fallen through after it came under scrutiny by the regulatory authorities. While the acquisition could have benefited the stock in the medium-to-long term, in the short term, typically the acquirer’s share price takes a dip when an acquisition goes through. Considering that the IAG share price has already dropped a lot this year, it might just be a good thing for it for now. 

My assessment

Of course even with all these developments, there are a lot of hoops for IAG stock to jump through before it can return to its pre-pandemic health. The trickiest hoop is perhaps getting passenger numbers to pre-pandemic levels. Before that happens, it cannot hope to start returning to healthy financial performance, in my view. 

Still, I see merit to the stock. For that reason, I bought the stock some time ago. It is risky, for sure, but I maintain that over time the IAG stock price could rise and I am planning to buy more of it now. 

The post Could it finally be time to buy IAG stock? appeared first on The Motley Fool UK.

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Manika Premsingh owns shares of International Consolidated Airlines Group. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.