The proprietor of British Airways has launched a recent €1.5 billion share buyback after reporting file annual earnings, underlining the size of the post-pandemic turnaround within the airline {industry}.
Worldwide Airways Group (IAG), which additionally owns British Airways, Iberia, Aer Lingus and Vueling, reported a 22 per cent rise in revenue after tax to €3.34 billion for 2025.
Group revenues climbed 3.5 per cent to €33.2 billion, regardless of passenger numbers edging down barely to 121.5 million in contrast with the earlier yr. The development was pushed by stronger pricing and better income per passenger moderately than quantity development.
In response, the FTSE 100-listed airline group introduced an 8.9 per cent enhance in its dividend and unveiled a €1.5 billion share buyback programme. It follows a €1 billion buyback accomplished final yr and provides to a rising development of enormous UK corporates returning surplus money to traders.
IAG stated market circumstances remained supportive, citing long-term demand development throughout its core transatlantic and European markets, mixed with constrained plane provide as producers battle with supply delays.
“Market dynamics are compelling, long-term demand development in our core markets and constrained provide in a consolidating {industry},” the corporate stated.
Share buybacks scale back the variety of shares in circulation, rising earnings per share and infrequently supporting share value efficiency. IAG’s shares, which had been buying and selling beneath £1 through the depths of the pandemic, at the moment are approaching historic highs, having beforehand peaked at round 470p in 2018.
The group has moved decisively from a crisis-era stability sheet to monetary energy. Simply over three years in the past, IAG was carrying near €20 billion of debt as worldwide journey collapsed below Covid restrictions. Since then, it has restored profitability and considerably diminished leverage.
Luis Gallego, IAG’s chief govt, stated the group’s improved profitability was underpinned by greater margins throughout its airline manufacturers. Iberia delivered an working margin of 16.2 per cent, whereas British Airways achieved 15.1 per cent, each traditionally robust ranges for the group.
“Our margins are considerably higher than these of many international opponents,” Gallego stated.
Wanting forward, IAG expects to develop capability by between 2 and 4 per cent yearly over the following few years. Nevertheless, it anticipates that offer constraints, pushed by delays from plane producers, will restrict industry-wide growth, supporting pricing energy.
The North Atlantic stays IAG’s most essential market, though development has moderated. The group described the route community as more and more mature, with future growth prone to be within the low single digits. Demand from US travellers softened barely through the summer time peak season final yr.
In contrast, IAG expects mid-single-digit development within the South Atlantic, the place it holds a powerful aggressive place.
Quick-haul European operations, which account for greater than a 3rd of group capability, have confronted stress from rising working prices and weaker demand in elements of northern Europe.
Regardless of these headwinds, the airline group’s file profitability and enhanced shareholder returns mark a putting distinction to its precarious place through the pandemic, and reinforce investor confidence within the sturdiness of premium transatlantic and leisure journey demand.
