Analysts at investment bank Jefferies said Richemont , Swatch Group and London-listed Watches of Switzerland could be affected.

“The overnight news that the US will impose an increased import tariff on Swiss imports of 39% could cause pain in CFR but especially in UHR and WOSG today,” said Jefferies analysts led by James Grzinic in a note to clients.

The analysts said that since the tariffs begin on Aug. 7, there is still room to maneuver.

“Of course that is one week away, allowing for plenty of last minute tweaks and changes to be agreed,” they added. “However, the direct impact of this extreme change (compared to investors likely assuming a 15% to follow given the recent EU deal) is meaningful in the watches vertical.”

— Ganesh Rao

Broader weakness in consumer spending and reduced business activity on ‘Trump Tariffs’ haven’t disrupted the British Airways owner either. The post-pandemic travel boom remains in play, and revenues at IAG, as it’s known, popped 9.6% higher in quarter one. Operating profit surged 191%, beating forecasts.

Given this resilience, can investors expect the company’s shares to continue rising?

Price forecasts

City analysts broadly think so. Of the 25 analysts with ratings on IAG, the consensus is that they will rise to within a whisker of 400p within the next year.

Source: TradingView

As with any stock, there are a range of views on how the Footsie company will fare. Still, investors should be mindful that the differences between some forecasts are substantial.

On the plus side, the most optimistic broker reckons the business will rise as high as 540p over the period. But a particularly bearish analysts thinks they’ll plummet all the way back to 235p.

Dividend estimates

With profits growth being sustained and its balance sheet mended, IAG paid its first dividend for four years in 2024, of 0.09 euro cents per share. On the strength of recent strong trading City analysts are expecting cash payouts to continue rising over the short term.

They predict:

A total dividend of 1.09 euro cents per share in 2025.

A cash reward of 1.25 euro cents in 2026.

These projections mean the dividend yields on IAG is 2.7% and 3.1% for 2025 and 2026, respectively.

Is IAG a buy?

Should individual and business confidence begin to decline, the brand power of IAG’s carriers like British Airways could still allow it to keep growing profits. The company’s exposure to both lucrative transatlantic routes and the low-cost segment may also help support earnings.

Yet I’m not yet convinced enough to buy IAG shares for my portfolio. I feel the company’s habit of reporting impressive profits may be running out of road, with consumer spending worsening in key markets and travel to the US from Europe weakening.

Arrivals to the US from the UK dropped 15% year on year in March, according to the US Department of Commerce.

There’s also the prospect of a fresh surge in oil prices amid simmering tensions in the Middle East. Fuel costs account for around 28% of IAG’s total costs. Those geopolitical issues also threaten disruption on its routes.

The owner of British Airways, IAG, is bracing for a potential backlash from shareholders over executive pay packages.

Influential proxy adviser ISS has recommended that IAG shareholders reject the proposed remuneration policy, which includes a special share award for CEO Luis Gallego, at the company’s forthcoming AGM on 18 June, as reported by Sky News, as reported by City AM.

Gallego is set to receive this award in addition to his salary, having earned £4.6m last year, a significant increase from £3.1m the previous year, amid a surge in global travel demand.

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ISS commented in a briefing to its clients, which was obtained by Sky News: “The one-time award is tied to operating margin performance above the company’s medium-term ambition.”

Further, ISS stated in the report seen by Sky News: “The company states that this proposal aims to align the CEO’s compensation package with senior management, address pay compression, enhance competitiveness, and bring the CEO’s pay closer to comparable FTSE peers.”

The report also noted: “While the company’s rationale is noted, material concerns are identified with the concurrent operation of the one-time award and the existing RSP [restricted stock plan], particularly as no reduction has been made to the RSP opportunity.”

British Airways owner cashes in post-Covid

IAG’s shares have seen a remarkable surge of nearly 90% over the past year, with the stock price hovering around 330p on Thursday and the company’s market capitalisation standing at £15.5bn.

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As one of several European airlines benefiting from the resurgence in travel demand after the Covid-19 pandemic, IAG – the parent company of British Airways, Iberia, Vueling, and Aer Lingus – has witnessed significant growth.

In August last year, the company reinstated its dividend for the first time since the pandemic, concurrently announcing an interim operating profit of approximately £1.1bn.

Although IAG has encountered some headwinds in recent months, including a decline in transatlantic travel following Donald Trump’s election, the firm assured investors in May that the “softness” in US economy bookings had been largely mitigated by the strong performance of its premium cabins.

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LONDON/CHICAGO/GDANSK (Reuters) -European airlines Lufthansa and Air France-KLM reported higher second-quarter profits on Thursday, defying worries that economic uncertainty and U.S. tariffs might hit transatlantic travel.

Transatlantic connections are among the most lucrative for airlines, having bolstered British Airways-owner IAG in recent years as European competitors struggled.

A number of U.S. airlines, including Delta, abandoned their full-year financial forecasts this spring on the back of weakening travel demand after U.S. President Donald Trump’s tariffs dented business and consumer confidence.

European airlines, however, are bucking the trend.

Lufthansa said on Thursday that demand in the U.S. remained strong despite a weaker U.S. dollar, while Air France-KLM highlighted the strength of its premium offering.

Lufthansa reported a 27% year-on-year increase in second-quarter operating profit to 871 million euros ($995 million), beating analysts’ average forecast of 805 million euros.

“Although the second quarter was again marked by geopolitical crises and economic uncertainties, we are today confirming our positive outlook for the full year,” Chief Executive Carsten Spohr said in a statement.

Spohr added on a call with reporters that uncertainty remained about the future of demand, but lower oil costs and efficiency efforts were helping to keep the outlook stable.

CONTRAST TO UNITED STATES

U.S. airlines have reported an improvement in bookings since late June after a sharp drop in March and April when Trump unleashed his trade war.

While demand has stabilised, airline executives say it is below estimates at the start of the year. Moreover, spending by price-sensitive travellers remains depressed amid lingering uncertainty about the U.S. economy and rising living costs.

European travellers are known for being more price-sensitive than Americans, often having less spending power. But wealthy Americans are flocking to Europe this summer.

While domestic U.S. travel has struggled, hitting budget airlines, resilient demand for premium and long-haul international travel has helped Delta and United Airlines perform better.

FIXING WEAKNESSES, NEW STRENGTHS

Lufthansa’s profit beat was helped by its investment in Italy’s ITA Airways, which contributed a “surprisingly large” profit to the group’s bottom line, Bernstein analyst Alex Irving said in a note to clients.

Still, Irving said Air France-KLM had “meaningfully outperformed” Lufthansa on North Atlantic sales.

IAG was the best-performing FTSE 100 stock in 2024

IAG’s share price has been dubbed “significantly undervalued” by analysts as flight numbers soar and the airline group shrugs off wider political and economic headwinds.

British Airways’ parent company reported quarterly operating profit well-ahead of expectations last Friday as it unveiled an order for 53 new Airbus and Boeing aircraft.

The bumper results came despite wider concerns that geopolitical turmoil and erratic policy developments in the US would impact the bottom line.

Transatlantic travel, British Airways’ bread and butter, has been hit by fears of a more hostile border under US President Donald Trump.

There is also an ongoing dispute between airlines and airplane manufacturers over who should front the costs of the US president’s tariffs.

Analysts at Peel Hunt described last week’s results as “knockout” and reaffirmed a Buy rating for IAG’s stock at a target price of 420p.

They noted any softness in US point-of-sale economy demand had been offset by the firm’s premium cabins.

Investors will also be relieved that March’s power outage at Heathrow Airport, British Airways primary hub, also had little impact on revenue.

Read more Heathrow closure cost British Airways owner £40m

Shares in British Airways owner IAG are currently changing hands for around 311p each – a rise of almost five per cent so far today.

The group ended last week with a market capitalisation of just over £14bn.

British Airways’ owner set for brighter outlook?

The outlook for IAG may have been even brighter, but it is impossible to guarantee that ongoing macroeconomic and geopolitical uncertainty would not cause problems down the line, Peel Hunt analysts wrote in a note on Monday.

They added: “With upgrade potential, a low rating, and ongoing buybacks, there is a lot to like at IAG, especially its high-growth, asset-light businesses.”

Shares in the owner of British Airways is up nearly 70 per cent over the last 12 months.

Heathrow Airport on Monday reported its busiest ever April in a big sign of travel demand’s resistance to any fall in business confidence created by Trump’s tariffs.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Air travel appears to have been immune to the trade turmoil unleashed by Trump on Liberation Day, and the sharp falls in stock markets.”

“Even though it appeared to lead to a fresh crisis of confidence among businesses, it’s done little to dent demand for trips away.”