Company Reports

International Airlines Group-owned British Airways will increase Latin American seat capacity by 25% in summer 2027, adding daily nonstop Heathrow-Buenos Aires flights and more capacity to Brazil, Chile, and Costa Rica. This follows IAG’s decision to hold 2026 group capacity broadly flat.

International Airlines Group is a European airline group operating hub-and-spoke and point-to-point networks. London Heathrow and Madrid are its principal hubs, complemented by operations at London Gatwick, Barcelona, and Dublin through British Airways, Iberia, Vueling, Level, and Aer Lingus.

International Consolidated Airlines Group delivered an operating profit of EUR 351 million (margin 4.9%) on 1.9% revenue growth, with passenger unit revenue up 8.2% at constant currency and net leverage reduced to 0.5 times EBITDA.

International Airlines Group is a European network airline using a hub-and-spoke model, with major hubs in London Heathrow, London Gatwick, Madrid, Barcelona, and Dublin.

International Airlines Group is a European network airline using a hub-and-spoke model, with major hubs in London Heathrow, London Gatwick, Madrid, Barcelona, and Dublin.

IAG delivered another record year, with operating margin at 15.1%, return on invested capital at 18.5%, and free cash flow of EUR 3.1 billion after EUR 3.4 billion in capital expenditure. Revenue rose 3.5% to EUR 33.2 billion, with passenger unit revenue broadly flat and capacity up 2.4%.

IAG's operating margin of 22% remained strong, yet underlying revenue trends—particularly for the trans-Atlantic—were softer than expected. Passenger yields were broadly flat year on year, and group unit revenue fell 2.4% as higher capacity and currency headwinds pressured pricing.

International Airlines Group delivered second-quarter operating profit of EUR 1.68 billion, up 35% year over year, with margin up 290 basis points to 11.8% as Iberia hit 14.5%. Premium traffic and Latin America strength offset softer US leisure. Net leverage fell to 0.7 times.

International Airlines Group is a European network airline using a hub-and-spoke model, with major hubs in London Heathrow, London Gatwick, Madrid, Barcelona, and Dublin.

International Consolidated Airlines Group reported total revenue of EUR 32 billion (up 9% year on year), driven by strong passenger demand, particularly in North America and intra-Europe, with a unit revenue increase of 3.1%. Operating profit was EUR 4.4 billion (up 27% year on year) with operating margin of 13.8%, the best in company history. IAG’s margin expansion was driven by a mix of both higher pricing power and cost efficiencies. The pricing environment remained favorable, especially in premium cabins, while structural cost efficiencies (fleet modernization, artificial intelligence-driven cost controls, and operational improvements) helped maintain high margins. As the group demonstrates its capacity to navigate constrained capacity environment and maintains high passenger revenue yields, we increase our fair value estimate to GBP 4.1 as we update our macro forecast and increase terminal midterm EBIT margin to 11.2% from 10.6% previously.

IAG is a European network airline utilizing a hub-and-spoke model with major hubs in London Heathrow, London Gatwick, Madrid, Barcelona, and Dublin.

While other airlines were hit by operational disruptions including fleet groundings, delivery delays, and strikes, along with softer demand compared with 2023, no-moat International Airlines Group demonstrated strong financial performance and strategic execution across divisions with robust revenue growth and cost management.

We initiate coverage of International Airlines Group with no moat and a fair value estimate of GBX 224 per share, supported by robust travel demand, gradual capacity recovery, and enhanced operational efficiency, leading to improved profitability and cash flow generation.

IAG is a European network airline utilizing a hub-and-spoke model with major hubs in London Heathrow, London Gatwick, Madrid, Barcelona, and Dublin.

We are dropping coverage of International Consolidated Airlines Group. We provide broad coverage of more than 1,500 companies globally and periodically adjust our coverage according to investor interest and staffing.

International Airlines Group, the owner of British Airways, reported its first quarter of profitability since the start of the coronavirus pandemic. The EUR 293 million EBIT was underpinned by a return to profitability at British Airways, the group’s largest revenue contributor. All businesses were profitable at an operational level with the strongest overall performance from Iberia. British Airways continues to face disruptions caused by staff shortages at its U.K. airports. Capacity expectations for the full year have been reduced to 78% of 2019 levels, from 80% previously, largely due to scaling back of schedules to manage airport disruptions at British Airways. Profitability is expected to significantly increase in the third quarter and be positive for the full year. We make no changes to our fair value estimate of GBX 270. Shares appear attractive, but we caution investors about our Morningstar Uncertainty Rating of Very High for the firm due to high levels of indebtedness.

International Airlines Group, owner of British Airways and Iberia, is lagging peers in the recovery. The group downgraded capacity guidance for the full year to 80% of 2019 levels, from 85% previously, due to constraints at British Airways. Staff shortages, high absence rates, IT problems and issues at Heathrow are hampering the ramp-up effort of British Airways, the biggest contributor to group sales. Issues are being addressed urgently, but could take a couple of months to resolve, especially outdated IT infrastructure, which urgently needs to be upgraded. Financial guidance has been maintained and the group still expects to be profitable on an operational level from the second quarter onward and for the full year. We will make slight adjustments to our forecasts, but do not expect any meaningful change to our GBX 270 fair value estimate. Shares appear attractive but we caution investors about our very high uncertainty rating for the firm due to high levels of indebtedness.

International Airlines Group is a European airline group flying under the British Airways, Iberia, Aer Lingus, and Vueling brands, with its main airport hubs at London Heathrow, London Gatwick, Madrid, Barcelona, and Dublin. The group is the highest quality of the European legacy airlines, achieving industry-leading margins and returns on invested capital due to its focus on fleet efficiencies and cost containment. The group entered the coronavirus pandemic in better financial health than its peers, allowing it the flexibility to better navigate the crisis. We believe the group can utilize the downturn to extract further cost efficiencies, driving EBIT growth of 3.5% per year to 2026 from 2019 precoronavirus levels.

Germany’s boost in defense spending, announced Feb. 27, will benefit most European defense contractors and could lead to multiyear increases in the growth outlook for these companies. While it is early days and very difficult to quantify the exact impact, we expect to make positive adjustments to our defense coverage. Of the pure-play defense names, narrow-moat Thales, Dassault, and Leonardo trade at discounts to our fair value estimates while wide-moat BAE Systems trades at a premium. We don’t believe our revisions will change this ranking by much, and our preference is for Thales and Dassault. Despite the impact from a demand and cost perspective on the airline and commercial aerospace companies we cover, we don’t foresee any structural long-term changes to their prospects and as such don’t anticipate any major changes to our fair value estimates. We maintain our preference for wide-moat Safran and no-moat Wizz Air under our aerospace and airline coverage, respectively.

No-moat International Airlines Group, or IAG, sounded an upbeat tone at the group’s full-year results. The group, which owns a portfolio of airlines including British Airways, Iberia and Vueling, forecasts a return to profitability in 2022. This is on the back of strong summer demand with capacity reaching 90% of precoronavirus levels by the third quarter and 85% for the full year. This is welcome news as the group reported an operating loss of EUR 2.8 billion for the year and cumulative operating losses of EUR 10 billion since the start of the pandemic, the highest of the legacy carriers under our coverage. The group has suffered relative to peers due to its large exposure to the U.K. market and premium international travel, which has been heavily restricted up until recently. The outlook is much rosier as many of the group’s core markets have either abandoned or heavily reduced travel restrictions. We don’t expect any major changes to our GBX 300 fair value estimate as we update our models. Shares appear extremely cheap, but we caution investors about the high uncertainty stemming from the group’s high debt levels and sensitivity of our assumptions.