Journey’s an funding theme I’m fairly bullish on. For the reason that pandemic, journey’s been a precedence for customers. And with cashed-up Child Boomers retiring in droves, I believe the long-term outlook for the trade is engaging. So might shares in British Airways proprietor Worldwide Consolidated Airways Group (LSE: IAG) be a great way for me to play the theme? Let’s talk about.

IAG has momentum

IAG seems to have momentum. For the third quarter of 2024 (This fall and full-year outcomes are out later this week), income rose by 7.9% yr on yr whereas working revenue jumped by 15.4%.

“Demand remains strong across our airlines and we expect a good final quarter of 2024 financially,” mentioned CEO Luis Gallego. This momentum’s encouraging.

What’s additionally encouraging is the momentum within the share price. Proper now, IAG shares are in a robust uptrend. Over the past yr, they’ve risen greater than 100%. I choose to purchase shares which can be rising over these which can be falling as traits can final for some time.

The shares look low cost

Regardless of the substantial share price improve, the shares nonetheless look low cost. At the moment, the consensus earnings per share forecast for 2025 is 61.8 euro cents. That places the forward-looking price-to-earnings (P/E) ratio at simply 6.4. For reference, American airline operator Delta Air Strains at the moment trades on a P/E ratio of 8.6

Dividends on provide

There are additionally dividends to think about. At the moment, the forward-looking yield right here’s about 3%. Nonetheless, buyers ought to observe that IAG is a Spanish registered firm. Because of this, shareholders who aren’t resident in Spain for tax functions are topic to the usual Spanish withholding tax. Additionally, dividends aren’t assured and may be cancelled or decreased at any time.

General although, there are fairly a number of causes to be bullish on IAG.

Questionable long-term investments

The factor is, I’m a long-term investor. And historical past exhibits that airways usually aren’t good investments over a protracted holding interval. This trade may be very capital intensive (which means corporations must spend some huge cash to maintain their companies working). This isn’t nice for profitability.

In the meantime, there are quite a lot of issues that may go unsuitable. Workers strikes, oil price will increase, terrorist assaults, wars, and world pandemics are just some examples. These components are mirrored within the long-term IAG share price chart.

Wanting on the chart, we will see that the share price is under the place it was a decade in the past.

Higher journey shares to purchase?

Given the capital intensive nature of the airline trade, and all of the dangers for airline operators, I believe there are higher methods I can play the journey theme. For my part, lodge operators (which frequently function capital mild franchise fashions), reserving website operators, rideshare corporations, and bank card corporations may very well be higher choices for me from a long-term funding perspective.