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magazineIAG grounded on British Airways woes
Investors considering the prospects of British Airways owner IAG (IAG) after the carrier’s flights were grounded by technical issues over the Bank Holiday weekend need to decide if this was a blip or a sign of inherent vulnerabilities in its IT systems.
The share price left little margin for error as it traded close to its highest level since 2015 ahead of the failure, which saw thousands of flights cancelled but so far the damage to its market valuation has been relatively limited. As we write the shares are down just 2.2% on Friday’s close at 600.25p.
The issue was blamed on a power surge, with a cyber attack ruled out, but this fails to answer why it took so long to get things back up and running and BA has also been criticised for its communication with customers affected by the problems.
TechMarketView research director Angela Eager says: ‘What happened to the disaster recovery plan a company of BA’s size surely must have had in place; a plan that ought to have been tested to see how it coped with an ugly shutdown.
‘BA can expect a very expensive compensation bill but the damage to its reputation, may well be worse. There will be lessons for BA but other organisations and their IT suppliers should also be watching and learning.’
Given the shares remain at relatively elevated levels it seems prudent to remain cautious while the fall-out from this incident rumbles on. (TS)
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