IAG Share Price (LON: IAG) Flying High As Oil Prices Settle Down

International Consolidated Airlines Group (LON:IAG), is seemingly back flying in clear skies, with the IAG share price up 5.28% through morning trading. The company, parent of British Airways, Iberia, Vueling, and Aer Lingus is riding bullish sentiment that has seen the shares gain 89% over the past 12 months.

Oil prices, one of an airlines largest costs have come down on the tentative Middle East ceasefire, and markets have responded strongly with IAG.

The longer term resurgence however reflects a broader recovery in the travel sector and IAG's initiatives to capitalize on pent-up demand and streamline operations. But is this upward trajectory sustainable, or are there hidden pockets of turbulence ahead?

The airline group's recent performance has been buoyed by several key factors. A robust first-quarter report in May revealed a 9.6% surge in revenues to €7 billion and a staggering 191.2% jump in operating profit to €198 million. This performance underscores the effectiveness of IAG's cost management strategies and the robust demand across its core markets. Further fueling investor confidence, IAG announced orders for 53 new long-haul aircraft from Airbus and Boeing, signaling a commitment to modernizing its fleet and expanding its presence in key markets.

Adding to the positive momentum, IAG implemented a €1 billion share buyback programme and declared a complementary dividend in February, a clear indication of management's confidence in the company's financial health. The company reported a net profit of €2.732 billion for 2024, a 2.9% increase from the previous year, driven by higher passenger revenues and reduced fuel costs. This shareholder-friendly approach has undoubtedly contributed to the stock's positive trajectory.

Analysts are increasingly optimistic about IAG's prospects. Jefferies raised its target price for IAG from 350p to 400p in March, maintaining a “buy” rating. This reflects potential upside of more than 20% from current price action.

Technically, the stock's performance also paints a bullish picture. IAG has consistently traded above key moving averages in recent months, confirming a positive trend over the medium term. Over the past 12 months, the price has generally stayed above the 200-day moving average, supporting a positive outlook for long-term investors.

Despite the overwhelmingly positive signals, some potential headwinds warrant consideration. British Airways CEO Sean Doyle's recent sale of £2.1 million worth of IAG shares, while linked to a 2022 long-term incentive plan, could raise eyebrows among some investors. While not necessarily indicative of a lack of confidence in the company's future, such transactions can sometimes trigger short-term volatility.

Strong financial performance, strategic fleet expansion, shareholder-friendly initiatives, and positive analyst sentiment all contribute to a bullish outlook. However, investors should remain mindful of potential headwinds and closely monitor the company's upcoming earnings release for further clarity on its recovery trajectory.