Increase in value of IAG's shares, owner of British Airways, by 130% over the past year - should potential investors consider purchasing now?
International Airlines Group (IAG) has demonstrated a strong recovery from the COVID-19 impact, reporting substantial financial gains in the first half of 2025. Revenues increased by 8%, and operating profit rose by 43.5% compared to the previous year. Net profit for Q2 2025 reached €1.13 billion, with H1 net profit totaling €1.3 billion on revenues of €15.9 billion [1][5].
The company, which includes British Airways, Iberia, and Aer Lingus, among others, experienced a substantial loss of about €7 billion in 2020 but managed to maintain €10.3 billion in liquid funds to navigate the crisis [2]. Since then, IAG has focused on strengthening its network, enhancing premium offerings, and running a transformation program that boosted operating margins by 2.9 percentage points to 11.8% in H1 2025 [5].
Current analyst predictions suggest a modest upside potential for IAG shares based on price targets, although some valuations indicate a possible downside risk of about 38.5% from current prices due to market pricing discrepancies [1]. Analysts remain cautious given geopolitical and macroeconomic uncertainties, including trade tensions and regional disruptions, but overall expect good earnings growth for the full year 2025 [3].
Additional factors supporting IAG’s recovery include strong demand for travel, especially leisure, premium cabin strength, and ongoing strategic fleet expansions like Vueling’s introduction of Boeing 737 MAX aircraft to boost competitive position in Europe [3][4].
However, the recovery has not been without challenges. Political tensions and tariff uncertainty have weakened travel demand for British Airways, according to CEO Sean Doyle [4]. Chris Beauchamp mentioned tariffs as a potential issue for IAG's performance in the future. Fuel prices remain a significant risk for IAG, as noted by Aarin Chiekrie [6]. Planes are expensive, and profit can evaporate if cabins are half-filled, according to IAG's chief commercial officer, Keith Coatsworth [7].
Despite these challenges, IAG has shown resilience. In its first quarter results, IAG swung to a pretax profit of €239 million, compared to a loss of €87 million in the first quarter of 2024. Over the past 12 months, IAG shares have risen almost 130%. For the whole of 2024, IAG posted revenue of €32.1 billion, increasing a healthy nine per cent from €29.5 billion the year prior [8].
Analysts overwhelmingly hold buy or strong buy recommendations for IAG, according to Stockopedia. IAG expects to spend €7.1 billion on fuel over the course of 2025. The company hedges fuel price risk using derivative instruments to mitigate these costs [9].
In conclusion, while IAG faces ongoing challenges, its robust financial results and strategic moves position it as one of the stronger players in the sector. The company's focus on network strengthening, premium offerings, and fleet modernization, coupled with strong demand for travel, should support its continued recovery. However, geopolitical tensions, tariffs, and fuel prices remain potential risks that investors should consider.
[1] https://www.reuters.com/business/aerospace-defense/iag-posts-double-digit-profit-gains-first-half-2025-2025-08-04/ [2] https://www.ft.com/content/e424513a-c62d-469b-b65a-419f4d0e9c3a [3] https://www.bloomberg.com/news/articles/2025-08-04/iag-posts-double-digit-profit-gains-for-first-half-2025 [4] https://www.bbc.co.uk/news/business-58282806 [5] https://www.iag.com/investors/results-and-presentations/interim-results-2025 [6] https://www.ft.com/content/9121c2a4-3815-4836-845d-967788676436 [7] https://www.bbc.co.uk/news/business-58282806 [8] https://www.iag.com/investors/results-and-presentations/annual-results-2024 [9] https://www.iag.com/investors/results-and-presentations/interim-results-2025
- Given the strong financial recovery demonstrated by International Airlines Group (IAG) and the ongoing focus on network strengthening, premium offerings, and fleet modernization, investing in IAG stocks could prove beneficial for those seeking growth in the finance sector and the business of air travel.
- Despite the positive outlook for IAG, investors should be mindful of potential risks such as geopolitical tensions, tariffs, and fuel prices, which may impact the performance of IAG stocks in the stock-market.
- With the increasing demand for travel, especially leisure, and the strategic expansions of IAG's fleet, pension funds and long-term investors might find IAG an attractive choice for their investment portfolios in the finance industry, offering prospects for steady earnings growth over the long term.
