International Consolidated Airlines Grp | Europe Risk Reward Update

Research evidence excerpt

International Consolidated Airlines Grp | Europe Risk Reward Update

rrent Stock Price Price Target Self-help: Positive

Source: Refinitiv, Morgan Stanley Research, Morgan Stanley Institutional Equities Division. The probabilities of our Bull, View descriptions of Risk Rewards Themes here

Base, and Bear case scenarios playing out were estimated with implied volatility data from the options market as of 24

Jun 2026. All figures are approximate risk-neutral probabilities of the stock reaching beyond the scenario price in either

three-months’ or one-years’ time. View explanation of Options Probabilities methodology here

BULL CASE €7.80 BASE CASE €6.00 BEAR CASE €3.10

Persistent pricing strength Gradual return to normal Significant pricing reversal

We value IAG on a 2027 forward blended We value IAG on a 2027 forward blended We value IAG on a 2027 forward blended

EV/EBITDA and EV/EBIT multiple of 3.9x/6x EV/EBITDA and EV/EBIT multiple of 3.9x/6x EV/EBITDA and EV/EBIT multiple of

on our bull case estimate, 1std dev above its on our base case estimate, 1std dev above its 3.5x/5.3x on our bear case estimate, in line

10-year median for 2015-19 and 2023-25. 10-year median for 2015-19 and 2023-25. We with 10-year median for 2015-19 and 2023-

This is similar to our Base case scenario. place the stock on this premium multiple to 25. We also assume lower-than-expected

However, we assume higher-than-expected reflect the company's stronger execution PRASK (-6% vs Base), leaving cargo and

PRASK (+5% vs Base), leaving cargo and and improved balance sheet profile. other revenues unchanged. FY27e EBIT

other revenues unchanged. FY27e EBIT margin reaches 11% in FY27 (vs. 16% in Base

margin reaches 19% in FY27 (vs. 16% in Base case scenario).

case scenario).