BA reached its 52 week low on 16 July and continued to rally up to its current price. With the price of oil sky rocketing in recent times and being the talk of the town as to where the price will go ($80 or $200 bl) the price of oil has weighed heavily on the financial survival of airlines and there is talk that this might impact BA sales and earnings. What should be considered is that BA is part of duopoly with Airbus being the major competitor. Although the current state of the economy might have an impact on the slow down in passenger numbers for the airlines this will not be a long term factor as we are not going to go back to using cruise ships for international travel. Furthermore, the launch of the 787 has got promising benefits for BA as it will provide airlines with more efficient operations (Ie: lower fuel burn ) and a smaller carbon foot print. It also should be noted the commercial aircraft sales is only one sector of BA operations.
BA has produced an average 16.32% profit performance over the last 5 years and has historically out performed the market in bull trends. There might be some further downside with the share price as wE could see futRher declines in the Dow Jones and S&P 500. The strategy is to start to slowly accumulate in market dips.
Share price forecast is set at $86
$62.77 (07/28/08)
