IAG shares have staged a recovery from the sharp sell off induced by the discovery of the Omicron variant.
The IAG share price was up over 6% on Wednesday as fears about the long term impact of Omicron subsided and investors stepped in to pick up IAG at knockdown price.
However, with IAG trading at 135p, there is still a long way to go to recover the losses recorded in the past three trading sessions.
At 135p, IAG is down 15% year to date, but 30% higher than when the vaccines were first announced November 2020.
Traders will be eyeing a short term close of the gap between 155p and the current price.
The drop in travel company shares was driven by the overarching fear that the sector could be again deprived of much needed revenue.
IAG recently revealed a 35% drop in Q3 passenger revenue to €3.1bn, down from €4.8bn in Q3 2020.
They also recorded a €2.6bn loss for the period as low passenger numbers continued to dog the airline.
This means sustained recovery in IAG shares will be dependent on the perception of both consumers and the market of how serious the new variant will be.
Many business heavily impacted by COVID-19, including airlines, had been hoping we were through the worst and were on a path through the pandemic.
“Will consumers dial back their festive plans? Will confidence about next year take another knock and prevent would be travellers from making that summer sun purchase? So much hope has been dumped squarely in the lap of this golden quarter and hope has a nasty habit of being dashed,” questioned Danni Hewson, AJ Bell financial analyst.
As highlighted by Danni Hewson, the key for IAG is now the summer trading period. Peer Easyjet released full year earnings yesterday and provided insight into how IAG may have been impacted by Omicron.
Easyjet said they were experiencing transfers of flights booked for Q1 but had seen promising signs for the summer.
Investors will hope this is also the case for IAG as poor H1 trading for the airliner will likely lead to further downside in the IAG share price.