As goods and services prices continue to rise, companies have struggled to remain profitable and make good returns for investors. The airline industry, for instance, suffered long periods of closure during the lockdown and now that oil prices are skyrocketing globally. The sector can’t seem to get its head out of the water long enough to catch a breath, and investing in British Airways might not look like the right move.
As we inch closer to a market recovery, British Airways stock is down by 35%, representing considerable savings if you put your money into the company. Furthermore, global travel has almost fully recovered, and we will soon feel the effects of inflationary control measures. Join us as we explore the world of aviation and whether investing in British Airways is a good idea.
An Overview of British Airways
Technically, you cannot buy British Airways shares as the airline is under AIG, a conglomerate of different European air carriers. Therefore, when you invest in AIG, you’re not just investing in British Airways but a handful of airlines. However, for simplicity, we’re just going to refer to the whole group as British Airways.
Furthermore, as the name suggests, British Airways is Britain’s flagship carrier and has been flying the skies worldwide since 1974. In addition, it started as a government agency privatised in the early 1987s and has since been on the London stock exchange and joined the Spanish Stock Exchange in 2011. This trading guide lists the best stock brokers in the UK if you’d like to look at the markets.
Today, a British Airways share is trading at an average price of 114p with low volatility. A report on Blomberg also indicated that profits are up from the summer break, and they expect operations to return to pre-covid levels by 2023. Good news for investors investing in the company now.
Why Invest in British Airways?
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An improved Economy Class
The airline set aside £6.5 billion to upgrade its premium economy cabins and customers’ onboard experiences during the lockdown. Changes included better amenities and catering options for long-distance travellers. Considering the airline was already one of the most popular on the continent, this move improved its standing with customers.
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Modern Fleet
The British airline operates one of all airlines’ most modern and efficient aeroplane fleets. It has replaced most, if not all, of its older, less fuel-efficient, and high-maintenance planes with modern twin-engined ones. This means that its running costs are lower, and the company can rely on its fleet more than it used to when using older planes.
The effects of the aviation industry on the environment have been a significant concern for most investors, and the airline is reducing its carbon footprint with this move.
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AIG
A significant advantage of investing in British Airways is that you’re not just investing in one company. AIG, the mother company whose shares you will be buying, is a combination of several airlines that operate in several regions and use different business models. This means that AIG is better able to absorb market oscillations than single publicly traded airlines as well as post better results.
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Historical Strong Performance
Since the company got its listing on the London Stock Exchange, it has seen tremendous growth and has always managed to record good returns for investors. Furthermore, it has cemented its market position as a global leader in the aviation sector after amalgamating with other similar airlines. And we do not doubt that the British airline will go back to recording excellent performance for its investors after the economic situation we’re facing gets better.
Final Words
No industry has been as hard hit by the current environmental, political, and economic conditions as the aviation sector. Cries for more sustainable practices are getting louder, inflation is rampant, and Russia’s pact with Saudi Arabia to raise oil prices somehow affects the industry. However, the sector is resilient, and if the British Airways story is anything to go by, you will be fine investing in the airline.
