BA-owner IAG pulls out of nose­dive

The Daily Telegraph - Business - - Business - Louis ash­worth

BRI­TISH Air­ways-owner In­ter­na­tional Con­sol­i­dated Air­lines fi­nally found some wings yes­ter­day. The group – which also owns car­ri­ers in­clud­ing Ibe­ria and Aer Lin­gus – was the big­gest riser on the FTSE 100 af­ter an­a­lysts at bro­ker Bern­stein said it is a “qual­ity play” as legacy air­lines try to emerge from the coron­avirus.

It out­per­formed a gen­er­ally ris­ing Euro­pean air­line sec­tor.

Bern­stein – which said it also likes the low-cost car­ri­ers Ryanair and easyJet – said that IAG was the most com­pelling in­vest­ment through a multi-year re­cov­ery, due to the strength of its busi­ness model.

IAG shares climbed 14.2p to 201p, a near 8pc gain that left it as Lon­don’s big­gest blue-chip riser by some dis­tance.

It is still the FTSE 100’s worst per­former of 2020, with shares trad­ing at less than a third of their start-of-year prices. But an­a­lysts have stuck by the group, which holds 21 “buy” rat­ings, against eight “holds” and just three “sells”.

Putting fur­ther wind be­hind the group was a pro­posal by Ger­many’s main avi­a­tion in­dus­try group, which called for the cre­ation of lim­ited air-travel cor­ri­dors be­tween the United States and cer­tain Euro­pean hubs. The move – which would help re­pair the dam­aged transat­lantic flight in­dus­try – would ben­e­fit IAG and Lufthansa es­pe­cially.

The FTSE 100 grad­u­ally gained pace dur­ing the ses­sion, with a tepid open de­vel­op­ing into mod­est gains by the close. About two thirds of Lon­don’s blue-chips rose amid thin news and eco­nomic flows.

Per­sim­mon shares slipped 70p to £27.52, tak­ing the edge off Tues­day’s chunky rise. The house­builder an­nounced its new boss would join sooner than ex­pected.

On the FTSE 250, Hochschild Min­ing was the big­gest faller, down 23p at 255p, af­ter post­ing a drop in first-half prof­its. Pre-tax prof­its at the pre­cious-me­tal miner fell to $6.5m (£5m) in the first six months of the year, ver­sus $29.5m for the same pe­riod last year. A drop in pro­duc­tion took rev­enue from $354.5m to $232m.

The group said it ex­pects ris­ing me­tal prices will boost its sec­ond-half per­for­mance. It main­tained its div­i­dend sus­pen­sion, say­ing a pay­out would be “in­ap­pro­pri­ate” in the face of con­tin­ued un­cer­tainty.

Bab­cock shares dropped 9.6p to 269.2p af­ter Mor­gan Stan­ley an­a­lysts slapped it with an “equal weight” rat­ing.

They warned the group’s out­look is “un­cer­tain”, adding the process of change ini­ti­ated by the de­fence con­trac­tor’s man­age­ment will be slow to take ef­fect.

Soft­cat shares ended the day vir­tu­ally un­changed af­ter an ini­tial jump. In a trad­ing up­date, the in­fra­struc­ture group said it “con­tin­ued to trade sat­is­fac­to­rily” dur­ing the three months to the end of July, adding that it will re­sume its nor­mal div­i­dend policy, as well as its pre­vi­ously can­celled in­terim pay­out. It closed up 3p at £13.32.

Avon Rub­ber was one of the big­gest mid-cap climbers, ris­ing 245p to £36.75 af­ter winning a 10-year con­tract to sup­ply gas masks for Nato. The Wilt­shire-based com­pany ex­pects to shortly re­ceive its first or­der un­der the con­tract.

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