International Airlines Group (IAG) has seen its share price swing wildly in recent sessions, reflecting broader concerns over fuel costs and geopolitical instability. After touching a low of 394p on Friday, the stock recovered to around 411p, but the underlying weakness persists as the threat of renewed Middle East conflict looms.
Fuel Costs Weigh on Airline Sector
Major US carriers have already signaled that higher fares are insufficient to offset surging jet fuel prices. Delta Air Lines trimmed its full-year earnings guidance after third-quarter results missed expectations, now projecting adjusted earnings between $5.10 and $5.60 per share, down from a prior range of $6.50 to $7.50. United Airlines echoed that caution, estimating jet fuel will average $4.80 per gallon in the final quarter, up from an earlier forecast of $3.90, and noted that fuel price increases are outpacing fare hikes.
These warnings have direct implications for IAG, which operates British Airways and Aer Lingus. According to IATA, the average jet fuel price has climbed to $196.70, a 6.6% increase month-over-month and nearly 120% higher than the same period last year. IAG has responded by raising ticket prices across its brands, but unlike its US rivals, it employs hedging strategies that provide some buffer against volatile fuel costs.
Geopolitical Risks and Earnings Outlook
The near-term outlook for oil remains uncertain, with potential for further escalation in the US-Iran conflict. Analysts suggest that renewed hostilities could push crude and jet fuel prices even higher, especially if Iran targets oil infrastructure or airports. Such a scenario would intensify cost pressures on airlines globally.
Investors are now focusing on IAG's upcoming third-quarter earnings report, which will offer clarity on how the company has navigated these headwinds. Market consensus expects operating profit to decline to €1.81 billion from €2.08 billion in the same quarter last year, reflecting the impact of elevated fuel expenses.
Technical Picture Points to Further Weakness
From a technical standpoint, IAG shares have been in a clear downtrend, falling from a June high of 492.7p to the current level around 410p. The stock found temporary support at 394p, which coincides with the 50% Fibonacci retracement level, but the broader chart pattern shows a descending channel. The price remains below the 200-day exponential moving average and the Supertrend indicator, suggesting that bearish momentum could persist.
Should the 394p support level break, the next downside target is seen at 350p. Until then, the stock may continue to trade within its current range, with the earnings release acting as a potential catalyst for direction.
This article is for informational purposes only and does not constitute financial advice.
