Broker snap: Credit Suisse upbeat about Vueling deal at IAG

10th Apr 2013 09:46

Credit Suisse has reiterated its 'outperform' rating and 295p target price for British Airways and Iberia owner IAG after Vueling's board recommended its 9.25 euros-per-share offer."Following recent restructuring progress with Iberia staff, the acquisition of Barcelona-based Vueling would represent another significant positive step towards driving profitability in Spain," said analyst Neil Glynn.He said that with Vueling, IAG is set to achieve earnings before interest and tax (EBIT) of €26m in 2013.While he does not consider the Vueling to be a significant standalone catalyst, control of the Spanish airline will allow Iberia to leverage Vueling's low-cost platform to reduce short-haul costs.It is also thought that the deal will provide additional expertise in short-haul efficiency with Veuling's Chief Executive Officer Alex Cruz "complementing" former Vueling Chief Operating Officer Luis Gallego who was recently appointed the head of Iberia CEO.Glynn said that the takeover will "enhance IAG's portfolio of options to achieve a turnaround in Spain, providing investors with greater confidence that the group can break even on short haul over the medium term."The stock was up 3.29% at 245p by 10:26 on Wednesday.BC