UBS update boosts IAG

UBS update boosts IAG

Shares in International Airlines Group have surged this morning after UBS upgraded stock from ‘neutral’ to ‘buy’.

UBS issued the statement on hopes of a successful resolution to IAG plans to restructure loss-making carrier Iberia.

IAG, which also operates British Airways, reach an agreement on a five year labour deal with unions in December, which also saw planned strikes called off

In a statement UBS said: “Despite its share price being up over 25 per cent in 2012, IAG was the worst performing European airline share under our coverage, underperforming Lufthansa by over 30 per cent and Air France KLM by around 45 per cent.

“We think that IAG could be the laggard most likely to outperform in 2013 should it achieve the concessions the company wants from Iberia staff.”

Following the release shares in IAG rose 4.8 pence per share to at 201.7 pence, the biggest riser in the FTSE 100.

Developments within the global economy may also favour IAG, UBS said.

The statement added: “We think some of the Iberia restructuring risk has dissipated and, although still challenging, we are becoming more confident on positive talk results.

“Despite the tough conditions in Europe with its international network, we see the company as a play on global economic recovery.

“Furthermore, should the fuel prices continue to be stable, and the euro continue to rise or remain stable, then we see 2013 delivering a fuel tailwind.”