Broker snap: Sell IAG on poor 2012 outlook, says Galvan

14th Dec 2011 12:42

Galvan Research and Trading has given airline International Consolidated Airlines (IAG) a sell rating, saying that recent forecasts are "now unrealistic".Last week, the International Air Transport Association (IATA) announced revisions to its industry outlook, downgrading its predictions for 2012. The association now estimates that airline profits for next year will be $3.5bn, compared to previous estimations of $4.9bn, with a net margin of 0.6%. The IATA blames the Eurozone crisis saying it "puts severe downside risk on the 2012 outlook as illustrated by the recently published OECD economic outlook." The firm also said that in a worst case scenario it estimates that the global aviation industry could suffer losses exceeding $8bn in 2012. Galvan's head of research Andrew Gibson said: "It is difficult to find any silver lining in the latest IATA forecast for the airline industry.""As with so many struggling industry sectors, the finger of blame points to the EU crisis, but specifically for IAG, there are growing concerns that the recent positive view projecting a £1bn plus profit for IAG by 2015 now looks unrealistic given the backdrop."The broker gives a target price of 135p.IAG shares were on the decline on Wednesday, trading 2.57% down at 144.2p by 12:42.BC