BA owner IAG hails record full-year profit

(Sharecast News) - BA and Iberia owner IAG said on Friday that it had delivered another "record" financial performance in 2025 and that it would be returning €1.5bn of excess capital in the next 12 months, starting with a €500m share buyback to complete by the end of May. In the year to the end of December 2025, operating profit rose 13% to €5bn and revenue was 3.5% higher at €33.2bn.

The operating margin grew by 1.3 points to 15.1% and adjusted earnings per share were up 22.4% at 69.5 cents.

IAG said trading was generally strong across all of its markets, although there was some softness in the third quarter.

The company, which also owns Vueling and Aer Lingus, pointed to positive impacts from lower fuel prices, with commodity prices down around 11% versus 2024, together with favourable foreign exchange, as the US dollar was about 3% weaker across the year.

"The first half of the year saw some uncertainty linked to the threat of and subsequent introduction of certain US tariffs. Geopolitical issues in certain regions were present across the year," it said.

"Despite these challenges, demand for travel proved to be robust overall and some areas of softness, such as US point-of-sale leisure and intra-European travel, particularly in central Europe, were offset by demand in other areas, including Latin America and the Spanish Domestic region," it said, adding that demand for premium travel remained strong.

Chief executive Luis Gallego said: "We are confident as we look to the future, with compelling market dynamics, long-term secular growth and a clear plan to leverage our business model and deliver our strategy."

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said IAG "flew past expectations, with operating profits coming in 3% ahead of market forecasts in the final quarter".

"The group's market-leading networks, strong brands, and fierce operational focus continue to drive performance skyward. Passenger revenue growth was broadly in line with the group's increased capacity, while ticket prices held firm. On the cost side, fuel represents the largest single expense for an airline and easing fuel prices have provided a strong tailwind for the bottom line, with fuel costs falling nearly 7%.

"Looking ahead, capital expenditure is set to ramp up over the coming years as IAG looks to expand its fleet and upgrade its digital infrastructure. That should see capacity grow between 2-4% annually over the next few years. There's plenty of free cash flow pumping through the business to fund these investments, with some left over, allowing management to boost shareholder returns with dividend payment up 8.9% alongside a new €1.5bn share buyback programme.

"IAG remains a cut above most of the competition operationally. Despite the run-up in share price over the last year or so, the valuation still looks attractive thanks to its impressive profit growth. With a strong balance sheet, market position and generous shareholder returns, there still looks to be some upside on offer, so the gates haven't closed yet for investors looking to get on board."