IAG Raised to Investment Grade by S&P
International Consolidated Airlines Group SA (IAG) has been raised to investment grade by S&P Global Ratings for the first time since 2020. The upgrade is a sign of the airline’s progress in recovering from the pandemic-induced crisis.
IAG’s Recovery from the Pandemic
The COVID-19 pandemic has had a devastating impact on the airline industry, with IAG being no exception. The company has been struggling to stay afloat since the start of the pandemic, with its share price dropping by more than 70% in 2020.
However, IAG has managed to make a remarkable recovery since then. The company has implemented a series of cost-cutting measures, such as reducing its workforce and cutting back on routes. It has also secured additional financing from the UK government and other sources.
These measures have enabled IAG to remain profitable in the face of the pandemic. In the first half of 2023, the company reported a net profit of €1.2 billion, compared to a net loss of €2.3 billion in the same period in 2020.
S&P’s Upgrade of IAG
S&P Global Ratings has upgraded IAG’s credit rating from BB+ to BBB-, which is the lowest investment grade rating. This is the first time since 2020 that IAG has been rated as investment grade by S&P.
The upgrade is a sign of the progress that IAG has made in recovering from the pandemic. S&P noted that the company’s financial performance has been strong, with its liquidity position improving significantly.
The upgrade is also a sign of confidence in IAG’s ability to continue to recover from the pandemic. S&P noted that the company’s cost-cutting measures have been effective and that it has been able to secure additional financing.
IAG’s Outlook
The upgrade of IAG’s credit rating is a positive sign for the company’s future prospects. The investment grade rating will make it easier for the company to access financing, which will be crucial for its recovery.
The company is also expecting to benefit from the gradual easing of travel restrictions. IAG has already seen an increase in demand for its services, with passenger numbers increasing in the third quarter of 2023.
The company is also expecting to benefit from the rollout of vaccines. As more people become vaccinated, the demand for air travel is expected to increase further. This should help IAG to continue its recovery from the pandemic.
Conclusion
IAG has made a remarkable recovery from the pandemic-induced crisis. The company has implemented a series of cost-cutting measures and secured additional financing, which has enabled it to remain profitable. S&P Global Ratings has upgraded IAG’s credit rating to investment grade for the first time since 2020, which is a sign of the progress that the company has made in recovering from the pandemic. The company is also expecting to benefit from the gradual easing of travel restrictions and the rollout of vaccines, which should help it to continue its recovery.