British Airways-owner IAG worst FTSE 100 stock of 2020
The company is the worst performing FTSE 100 stock of 2020, according to data compiled by stockbroker AJ Bell.
By early December, the stock was down 60% on a total returns basis since the start of January. That comfortably outpaced IAG’s nearest rival for the wooden spoon, Rolls-Royce (RR.L), which has lost just over 48% on a total returns basis.
The slump compares to a decline of just over 13% for the FTSE 100 as a whole across 2020.
The reason for IAG and Rolls-Royce’s underperformance isn’t hard to fathom. The onset of the COVID-19 pandemic brought international travel to a virtual standstill in early 2020 and flight volumes have struggled to recover ever since.
That has been bad news for airline operators like IAG but also their suppliers, including Rolls-Royce. A large part of the manufacturer’s business revolved around airplane engines. As travel dried up, demand for selling and servicing engines disappeared too.
Both IAG and Rolls-Royce were forced to go cap in hand to shareholders to raise billions from investors this year and were forced into painful restructures.
Both stocks have fallen further since AJ Bell compiled its data on 11 December. The two companies were hit by the reimposition of travel bans on the UK, amid panic about the new strain of COVID-19.
Neil Wilson, chief market analyst at Markets.com, thinks there could be upside to IAG shares given their precipitous collapse.
READ MORE: Travel and transport stocks nosedive as countries ban flights from UK
“Shares are not expected to get back to pre-pandemic levels next year – passenger travel levels are not seen returning to 2019 numbers for some years,” he said, “but a steady reopening of the economy and pent-up demand among holidaymakers to get out and travel ought to support earnings recovery in 2021.”
Other FTSE 100 stocks that have suffered badly in 2020 include Lloyds (LLOY.L), down 42.7%, BP (BP.L), down 40.4%, and Shell (RDSB.L), down 39.4%.
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