IAG Shares Lower Despite Record 2025 Results and €1.5 Billion Cash Return

International Airlines Group (LON: IAG), the parent company of British Airways, Iberia, and Aer Lingus, has reported exceptional full-year results for 2025, triggering a move lower in its share price.

The company's strong operational performance and disciplined capital allocation have translated into significant value creation for shareholders.

Revenue climbed 3.5% to €33,213 million, surpassing the previous year's €32,100 million. Operating profit before exceptional items jumped 13.1% to €5,024 million, compared to €4,443 million in 2024, resulting in an improved operating margin of 15.1%. Adjusted earnings per share saw a substantial increase of 22.4%, reaching 69.5 € cents per share.

IAG generated a significant free cash flow of €3.1 billion, slightly lower than the €3.6 billion reported in 2024. The company's return on invested capital increased to 18.5% from 17.3% the previous year, demonstrating efficient use of its resources.

Shareholders are set to benefit from a proposed 8.9% increase in the total dividend per share for 2025. In addition to the dividend increase, IAG announced a further return of excess cash totaling €1.5 billion, commencing with a €500 million share buyback program, an increase from the €1 billion announced in February 2025.

Key Drivers of IAG's Success:

• Compelling Market Dynamics: Long-term demand growth in core markets coupled with constrained supply due to industry consolidation.
• Strategic Execution: Focus on delivering exceptional service to customers, fostering employee engagement, and maximizing shareholder returns.
• Strong Operational Performance: High free cash flow generation driven by efficient operations and cost management.

Luis Gallego, IAG Chief Executive Officer, stated: “We reported another year of exceptional performance in 2025, delivering for our customers with continued improvements in ontime performance and customer satisfaction… Execution of our strategy and transformation programme is creating value for shareholders.”

Looking ahead to 2026, IAG anticipates continued revenue and earnings growth, supported by compelling market dynamics and long-term demand trends. The company plans a capacity increase of approximately 3%, with a focus on its core markets. Non-fuel unit costs are expected to decline by around 1%, benefiting from favorable foreign exchange rates.

IAG is committed to achieving net-zero emissions by 2050 and continues to invest in sustainable aviation fuel and more fuel-efficient aircraft. In 2025, the company's carbon intensity reached 77.5gCO2/pkm, driven by increased sustainable aviation fuel usage and the delivery of 25 latest-generation aircraft.

The company's strong balance sheet, with net leverage at 0.8x, provides financial flexibility for future investments and shareholder returns. IAG plans to invest approximately €3.6 billion in capital expenditures, depending on fleet deliveries, and remains committed to a sustainable ordinary dividend.