Broker snap: Morgan downgrades BA, slashes price target
Shares in British Airways were on the descent today after Morgan Stanley downgraded its rating on the airline and slashed its price target in a note alluding to the recent T5 fiasco and the threat of striking pilots.
The broker lowered its rating on BA to 'underweight' from 'equal-weight' and more than halved its price target to 120p from 245p.
"British Airways has had a multitude of issues arise that are likely to place increased pressure on management and the company's financial results," Morgan said.
"Traffic statistics for March were weaker than expected. Following this, the move to T5 has been less than stellar. Finally, the contentious relationship with the pilots' union appears to be taking a turn for the worse."
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It said that BA may end up paying more than the £16m the airline estimated for 12 days of cancelled flights following the chaotic opening of Heathrow's fifth terminal.
Morgan now estimates earnings per share of 20p in the year to March, from a previous estimate of 41p. For 2009, it sees EPS of 31p, compared with 45p previously.
The downgrade is another T5-related blow for BA, which said Friday it was postponing the transfer of its long haul services to the new terminal to June, having initially scheduled the move for the end of this month.
