IAG Group shares reach minimums below one euro.

No other sector has been so punished in the stock market as the airlines in the wake of the crisis unleashed by the coronavirus. And no other sector is so threatened by the new wave of restrictions that different European countries are adopting to try to stop the second wave of coronavirus.

See also: New travel restrictions bring the reduction in IAG capacity in 2020 to 63%.

The turbulence in the stock market does not cease in the whole sector, and in particular in IAG, the group that owns British Airways, Iberia, Vueling, Aer Lingus, which has its main markets in the United Kingdom and Spain, two of the European countries with the highest incidence of coronavirus and with more pressure to adopt additional restrictions.

The prospects for recovery in the sector, which at the beginning of June triggered a 100% rally in three weeks of IAG, have deteriorated substantially in recent weeks due to the incessant increase in new infections in Europe. Credit Suisse analysts are now downgrading their assessment of an airport manager such as France’s ADP, and airlines are reversing their increase in supply. Announcements of flight cuts follow in the face of weak air demand. Today Wizz Air falls on the London Stock Exchange by anticipating that it will halve the supply of flights planned for October and warn of a very difficult winter.

See also: British Airways President advocates for job cuts because of the pandemic.

IAG shares are once again at the forefront of the biggest falls in the Ibex today, on the way to what would be its sixth loss in the last seven days. This downward spiral has reduced IAG’s cushion above the euro per share barrier to a minimum. Yesterday closed at new lows since the crisis, at 1.03 euros, the result of a collapse of 28% in six days.

The new punishment that the airline receives today in the stock market causes the loss of the support of the euro per share in its minimum intraday. Its shares are thus closer to the adjusted historical minimums that date from the end of 2011, when it fell to 0.78 euros.

The loss of the euro per share raises the accumulated collapse in the year to the brink of 80%, the highest of all the Ibex, and more than 55% recorded by the European airline industry index in the same period. This crash reduces its stock market capitalization below the threshold of 2,000 million euros, a figure that will more than double once its capital increase, set at 2,741 million euros, is completed.

The loss of the support of the euro per share occurs on the day when the subscription period for its capital increase ends, aimed at strengthening its balance sheet after the situation generated by the pandemic and improving its liquidity position in the face of a prolonged fall in demand. In the capital increase, two rights are required to buy three new shares, with a subscription price of 0.92 euros.

At current prices, and before possible updates to the outlook when the expansion is completed, more than 60% of the firms covering the stock advise buying, 32% holding and only 7.4% selling.

The analysts, besides highlighting the impact that the news on the extension of the coronavirus and on the advances in the vaccines will have on IAG’s shares, include the airline among the most sensitive values of the Ibex to the result of the elections in the United States, foreseen for November 3rd.

Citigroup pointed out this week that in the current context, the greater sensitivity of European airlines to the result of the elections in the United States is related to the negotiations that the sector is carrying out with the different governments on both sides of the Atlantic to ease the restrictions imposed on air traffic due to the coronavirus. A greater harmony between the White House and the European governments when it comes to facilitating cross border air traffic would mean a boost in the stock market for IAG and the rest of the European airlines, according to Citi’s conclusion.

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