Broker snap: London strength gives IAG time to fix Madrid

2nd Aug 2011 17:54

Analysts at Credit Suisse reiterated their "overweight" recommendation for airline IAG with a price target of 330 pence because they consider its second quarter results to stand out in the airline sector. "2Q illustrated the strength of the IAG business model relative to peers," Credit Suisse opined.The Swiss bank's analysts point out that demand for landing slots at Heathrow is a clear catalyst for the airline's current results. They warn that "Iberia's 1H [first half] loss emphasises the need for execution of short haul restructuring plans." Credit Suisse maintains its 2011 earnings before interest and tax (EBIT) estimate at 701 million euros while lowering next year's EBIT estimate by 4% to 1.025 billion euros, because it expects the slight decline to revenue to exceed the decline in costs."IAG distinctly outperformed its flag carrier peers as 2Q results were reported and we expect it to continue to do so as our top pick in the sector," concludes Credit Suisse. "London strength gives Madrid time."J.M.