ii view: IAG benefits as consumers ring-fence holiday cash

First-half results to 30 June

• Revenues up 8% to €15.9 billion (£13.8 billion)
• Adjusted operating profit up 43.5% to €1.88 billion (£1.64 billion)
• Net debt of €5.46 billion, down from €7.52 billion in late December
• Total 2024 dividend of €0.09 per share, up from no payment in 2023

Guidance:

• As of 29 July, 57% booked for the second half with booked revenue in line with last year

Chief executive Luis Gallego said:

“Our strong performance in the first half of 2025 reflects the resilience of demand for travel and the success of our ongoing transformation, underpinned by the fundamental strengths of our Group. We continue to benefit from the trend of a structural shift in consumer spending towards travel. 

“These results give us confidence that we will deliver good earnings growth and margin progression for the full year and enable us to create value for our shareholders through our sustainable dividend and the share buyback.”

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ii round-up:

International Consolidated Airlines Group SA (LSE:IAG) operates a fleet of around 600 aircraft across several brands flying more than 100 million passengers annually to over 90 different countries.  

It is a Spanish registered company with shares traded on the London and Spanish Stock Exchanges.

Group brands are UK based British Airways, Spanish airlines Iberia, Vueling, and Level and Irish based Aer Lingus. 

For a round-up of these latest results announced on 1 August, please click here. 

ii view:

Formed in 2011 following a merger of British Airways and Iberia, IAG today employs around 74,000 people in 77 countries. Operating out of core airport hubs London, Madrid, Barcelona and Dublin, group rivals include Deutsche Lufthansa AG (XETRA:LHA), Air France-KLM (EURONEXT:AF) and budget airlines such as easyJet (LSE:EZJ) on many inter-European routes. 

Passenger revenues accounted for 87% of sales during the first half of 2025, with Cargo coming in at 4%. Other revenues including those for the BA Holidays business, demand for Iberia’s third-party maintenance and repair services, as well as those for its Avios customer loyalty scheme, make up the balance of 9%.   

For investors, US imposed trade tariffs on Europe could still see corporate and consumer sentiment souring, resulting in reduced travel to the US. Increased taxes rumoured at the Autumn Budget could crimp demand. Conflicts and heightened geopolitical tensions such as those impacting Ukraine could yet spread wider, while many other factors which can hinder airlines such as air traffic controller strikes and the weather also warrant consideration. 

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More favourably, greater importance of travel among consumers following the pandemic continues to generate robust passenger demand. Diversity of airline brands, pricing segments and geographical hubs exist. Group net debt continues to reduce following the industry’s Covid 19 shutdown. IAG’s fleet is moving toward more fuel efficient and climate friendly aircraft, while a forecast dividend yield of around 2.5% is not to be ignored. 

On balance, and despite ongoing risks, greater optimism around prospects for the industry and a consensus analyst forecast of fair value at over 430p per share is likely to keep investors interested in the business.

Positives: 

• Diversity of brands
• Industry consolidator

Negatives:

• Many factors outside of management control
• Industry wide climate change concerns

The average rating of stock market analysts:

Buy