Press tips: International Airlines Group, InterContinental Hotels

By Sharecast, 15 February 2012

In the Times, Tempus sings the praises of Willie Walsh, who has managed to keep British Airways flying through a two year union dispute and the financial crisis of 2008-09 when BA lost £1bn.

In 2011 the company is expected to have made a spectacular recovery, with pre-tax profits coming in at around €700m. Tempus goes as far to say that Walsh "deserves to be richly rewarded". You don't read much journalism encouraging the payment of bonuses!

However, Tempus makes the point that, since the merger with Iberian and the creation of International Airlines Group (IAG), Walsh faces new difficulties, in particular the continuing high oil price and the Spanish labour unions. If the Irishman can manage those two business issues, Tempus seems to be implying IAG is a buy, although this isn't clearly stated. Given the history of airlines, caution must be the watchword (Last IC rating: Sell, 1 Dec).

In the Telegraph Questor tries to decide whether InterContinental Hotels Group is more Fawlty Towers or five-star investment. The column comes down heavily on the side of the latter.

Its Chief Executive, Richard Solomons, has been in his post nearly a year and has paid down debt with one off sales. It's thought the next asset to go will be the The Barclay in New York, which could fetch up to $1bn.

Yet it is not all a tale of sales. InterContinental has a big pipeline of new hotels being developed, 25 per cent of which are in China with the company aiming to have as many sites in the rising dragon economy as in the US by 2025. IHG also offers a reasonable dividend of 2.3 per cent.

Having tipped the stock just under a year ago (since when it has gained 11.8 per cent) Questor says hold, but interestingly, still thinks IHG could yield more profits (Last IC rating: Hold, 14 Feb).

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