Agree. If a business is at a point in the cycle where it's compellingly cheap against long term fundamentals then it can be a good entry for a turnaround. Unfortunately, they seem to fit your category a), just bobbling along with a decent bureaucracy and with seemingly limited ability to deliver returns.
I had a look across the sector and settled with Tower, purely because having faced the abyss of the Canterbury quakes they seem to be lean, mean and with surplus capital (greater margin for error). Not a recommendation, just pointing out that even near its lows, at face value IAG still doesn't appear the most tempting opportunity in the sector.
IAG Price at posting:
$4.27 Sentiment: None Disclosure: Not Held
(20min delay)