Broker snap: Investec upbeat after IAG beats guidance in 2012

28th Feb 2013 09:25

Investec has retained its 'buy' rating and 270p target price for British Airways owner International Consolidated Airlines Group (otherwise known as IAG) after the 2012 bottom line result came in ahead of forecasts.The broker pointed out that IAG reported an operating loss of €68m for 2012, excluding the restructuring costs and impairments associated with its struggling Spanish airline Iberia. This compares with the company's guidance for an operating loss of €120m in November and Investec's €136.4m loss forecast - "a significant beat", the broker said.Investec highlighted that continued yield and load-factor strength offset higher unit-fuel and underlying costs.The broker said that the strength of British Aiways - with synergies from the bmi unit ahead of expectations - means that it is comfortable with its earnings before interest and tax (EBIT) forecast of €505m for this year."We welcome the aggressive tone being taken by the management on Iberia ('must adapt to survive') and we are encouraged by the continued strength of trading at British Airways," Investec said. "Iberia strikes are likely to continue, but we see [Chief Executive Officer] Willie Walsh winning the battle on driving the required turnaround."Shares were up 5.32% at 233.5p by 10:19 on Thursday.BC