International Airlines Group: 2Q26 - initial thoughts

Research evidence excerpt

International Airlines Group: 2Q26 - initial thoughts

Forecast returns

Forecast price appreciation -12.2%

Forecast dividend yield 1.5%

Forecast stock return -10.7%

Market return assumption 9.1%

Forecast excess return -19.8%

Company Description

IAG (International Airlines Group) is the holding company comprising UK-based British

Airways, Spanish-based Iberia, Vueling and LEVEL, and Irish-based Aer Lingus. IAG was

formed in January 2011, creating Europe's third-largest airline group, and each airline has a

separate operating company within the IAG holding structure. The group operates more than

550 aircraft and flies to 250-plus destinations across 91 countries. The group holds leadership

positions in its home markets of London, Madrid, Barcelona and Dublin. It also has a strong

presence on the North Atlantic, South Atlantic and intra-European routes.

Valuation Method and Risk Statement

Trading airlines stocks involves risks. Over the long term, a diversified portfolio of airline stocks

has underperformed broader market averages. Our estimates -- which form the basis for our

valuations and stock price targets -- are subject to a very high degree of error and may be

materially inaccurate. This forecast error is primarily driven by revenue volatility -- a function of

unpredictable business travel spending combines with significant operating and financial

leverage. Other sources of error include but are not limited to jet fuel price volatility, low cost

carriers, labour disruptions, bankruptcy risk, and significant event risk associated primarily

with terrorist actions. All of these ri sk factors combine to make our estimates statistically

unreliable. We value IAG on 3.4x 26e EV/Ebitda.

First Read: International Airlines Group 31 July 2026 ab 2