International Airlines Group: IAG Loyalty CMD

Research evidence excerpt

International Airlines Group: IAG Loyalty CMD

ress in all of these regions, including

Iberia card improvements, Bank of Ireland partnerships, and attractive co-brand/points-

transfer relationships in Latin America and the US. But the disclosed cash inflow mix and

emphasis on UK card spend still suggest the UK remains the principal economic driver.

Is growth more about execution than uniqueness? Management’s framing leaned heavily on

the distinctiveness of IAG Loyalty’s assets: a multi-airline currency, strong partner set, rich

consumer data, privileged inventory access and trusted brand. Those are real strengths. But the

more important takeaway may be that IAG simply executes this opportunity more effectively

and more consistently than European peers, rather than operating a structurally incomparable

model. That matters for how investors think about sustainability versus catch-up risk.

Can IAG continue to broaden redemption without diluting value? Management was clear

that making Avios easier to use is central to the growth model, and equally clear that raising

redemption prices too aggressively would hurt the long-term business. That is strategically

sensible, but it remains a balancing act: if redemption becomes too expensive, engagement

weakens; if it becomes too generous, margins could come under pressure. Management argued

the business has maintained stable margins over time, with redemption cost the key

determinant, and stated that the focus remains on keeping the system attractive rather than

over-optimising short-term economics.

Will Starlink deliver active members? IAG Loyalty seemed optimistic that the future Starlink

wifi offering can generate a significant uptick in active members. We recognise that Starlink will