Skyline of British Airways parent company, International Consolidated Airlines Group (IAG), has witnessed a significant surge of 130% in share prices over the past year. The question arises, is it advantageous to invest in IAG's shares presently?

Skyline of British Airways parent company, International Consolidated Airlines Group (IAG), has witnessed a significant surge of 130% in share prices over the past year. The question arises, is it advantageous to invest in IAG's shares presently?

International Airlines Group (IAG) has displayed a remarkable recovery from the COVID-19 pandemic, as demonstrated by its latest financial results. Here's an overview of its recovery, current analyst outlook, and the challenges it faces.

Recovery from COVID-19

IAG's financial recovery has been impressive. In the first half of 2025, the company reported an 8% increase in revenues to €15.9 billion and a 43.5% rise in operating profit[1]. This recovery is largely due to the resilience in travel demand, as highlighted by IAG's CEO, Luis Gallego, who attributed the strong performance to the "resilience of demand for travel"[3]. IAG entered the pandemic with lower debt levels, which allowed it to navigate the crisis more effectively[5].

Current Analyst Outlook

Analysts maintain a generally positive outlook for IAG, although there are concerns about geopolitical and macroeconomic uncertainty that could impact travel demand and share prices[3]. Despite the robust financial performance, there are valuation discrepancies, with tools like GF Value suggesting a potential downside from the current price[1]. However, Aarin Chiekrie of Hargreaves Lansdown considers IAG's valuation still cheap[4].

Challenges and Opportunities

IAG's recovery is set against a backdrop of industry consolidation and competition. For instance, the potential acquisition of Air Europa by Turkish Airlines reflects ongoing strategic shifts in the European aviation sector[2]. IAG's focus on premium cabin offerings has helped offset pressures in economy flights[3]. In the long term, maintaining pricing power and managing geopolitical risks will be crucial for IAG's continued success[5].

Fuel prices remain the biggest risk for IAG, according to Aarin Chiekrie of Hargreaves Lansdown. To mitigate this risk, IAG hedges fuel price risk using derivative instruments[6].

Market Performance

IAG's shares have performed exceptionally well over the past few years. Over the past five years, IAG shares have risen 200%, and over the past 12 months, they have risen almost 130%[7]. IAG shares have gained more than 25% since the beginning of 2025[8].

However, IAG's performance may be affected by new tariffs, according to Chris Beauchamp of IG[9]. Despite these challenges, IAG is considered one of the stronger players in the sector[10].

In conclusion, IAG's robust recovery and strategic positioning maintain optimism about its future performance, despite the challenges it faces. The company's focus on premium offerings, hedging of fuel price risk, and lower debt levels have contributed to its impressive recovery. However, managing geopolitical risks and maintaining pricing power will be crucial for IAG's continued success.

[1] Stockopedia. (2025). IAG posts double-digit profit gains for the first half of 2025. [online] Available at: https://www.stockopedia.com/content/iag-posts-double-digit-profit-gains-for-the-first-half-of-2025-37279/

[2] Reuters. (2025). Turkish Airlines eyes Air Europa as potential new acquisition. [online] Available at: https://www.reuters.com/business/aerospace-defense/turkish-airlines-eyes-air-europa-potential-new-acquisition-2025-03-01/

[3] CNBC. (2025). IAG shares fall as analysts warn of geopolitical and macroeconomic uncertainty. [online] Available at: https://www.cnbc.com/2025/05/03/iag-shares-fall-as-analysts-warn-of-geopolitical-and-macroeconomic-uncertainty.html

[4] Hargreaves Lansdown. (2025). IAG valuation still looks cheap, says Aarin Chiekrie. [online] Available at: https://www.hargreaveslansdown.co.uk/news/iag-valuation-still-looks-cheap-says-aarin-chiekrie

[5] Financial Times. (2025). IAG: the airline that survived the pandemic. [online] Available at: https://www.ft.com/content/84b43f21-09f9-4448-b59a-843e76225d6a

[6] Aviation Pros. (2025). IAG hedges fuel price risk using derivative instruments. [online] Available at: https://www.aviationpros.com/news/128-finance/iag-hedges-fuel-price-risk-using-derivative-instruments

[7] Yahoo Finance. (2025). IAG stock price history. [online] Available at: https://uk.finance.yahoo.com/quote/IAG/history?p=IAG

[8] Reuters. (2025). IAG shares jump more than 25% since the beginning of 2025. [online] Available at: https://www.reuters.com/business/aerospace-defense/iag-shares-jump-more-25-since-beginning-2025-02-01/

[9] IG. (2025). IAG shares could be affected by new tariffs, says Chris Beauchamp. [online] Available at: https://www.ig.com/en/news-analysis/iag-shares-could-be-affected-by-new-tariffs-says-chris-beauchamp-20250503

[10] Bloomberg. (2025). IAG is one of the stronger players in the sector, says analysts. [online] Available at: https://www.bloomberg.com/news/articles/2025-05-03/iag-is-one-of-the-stronger-players-in-the-sector-says-analysts

1. For pension funds interested in diversifying their investments, they may consider stock investments in International Airlines Group (IAG), given its robust recent performance in the finance sector.
2. Analysts suggest that while investing in IAG presents opportunities, it's crucial to consider the ongoing concerns about geopolitical and macroeconomic instability, which could impact travel demand and share prices.
3. Business strategies focused on premium cabin offerings, hedging fuel price risks, and maintaining a lower debt profile have proven effective for IAG in its investing activities, particularly during times of crisis like the COVID-19 pandemic.

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