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IAG to Acquire Rivals? EasyJet Shares Climb On Report Of Potential European Airline Consolidation

Sam Boughedda trader
Updated 31 Oct 2022

Buy IAG Shares Your Capital Is At Risk

Key points:

  • The Times reported IAG could look to acquire struggling rivals
  • The report mentions names such as EasyJet and TAP
  • IAG and EasyJet shares have risen Monday

London-listed airline stocks International Consolidated Airlines (LON: IAG) and EasyJet (LON: EZJ) are up Monday morning following a report that IAG is looking to consolidate the European airline industry and has set its sights on struggling rivals.

The Times said IAG, which owns carriers such as British Airways, Iberia, and Aer Lingus, is looking to acquire another airline after it reported a strong summer, with TAP and EasyJet mentioned.

IAG reported third-quarter results on Friday, with third-quarter revenues coming in at 0.9% above Q3 2019 (pre-pandemic) while operating profits for the year are set to be above guidance. In addition, in its preliminary results a couple of weeks earlier, IAG said forward bookings showed no signs of weakness.

British Airways Plane

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The Times pointed to comments from IAG chief executive Luis Gallego, acknowledging that the company was “a platform for consolidation.”

“We will only do what makes sense, but we see there are opportunities to be stronger,” Gallego added. “We are a group that wants to consolidate the industry.”

Despite IAG's results and demand looking positive, EasyJet expects to report a £180 million loss for this year, while it has also cut capacity this winter as getaway demand cools. Meanwhile, the Portuguese government said it intends to sell the country's flag carrier TAP.

Ryanair Chief Executive Michael O'Leary previously predicted a consolidation of the European airline sector.

At the time of writing, EasyJet shares are up 5.94%, while IAG has climbed 3.9%.

Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples.