IAG Full Year 2025 Earnings: Revenue Hits €33.2 Billion with Record Operating Profit

IAG delivered record full-year results for 2025, with operating profit reaching €5.02 billion (beating the €4.97 billion consensus) and adjusted EPS of 69.5 euro cents, up 22.4% year-over-year. Revenue grew 3.5% to €33.2 billion, driven by resilient premium transatlantic demand and lower fuel costs. Shares fell approximately 6% on February 27, 2026, as investors reacted to the absence of detailed profit guidance for 2026 and concerns over rising fuel prices.

About IAG (International Airlines Group)

International Consolidated Airlines Group S.A. (Ticker: IAG on the London Stock Exchange and Spanish stock exchanges) is a British-Spanish multinational airline holding company formed in January 2011 through the merger of British Airways and Iberia. The company is registered in Madrid, Spain, and has its corporate headquarters in London, England. IAG operates through five main airline segments: British Airways, Iberia, Vueling, Aer Lingus, and LEVEL, along with complementary businesses including IAG Loyalty, IAG Cargo, and Maintenance, Repair and Overhaul (MRO) operations.

As of late February 2026, IAG has a market capitalization of approximately £20.88 billion (around €21.7 billion), with a trailing P/E ratio of approximately 7.5 and a dividend yield of about 2.1%. Qatar Airways is the single largest shareholder with a 25% stake. In 2025, IAG carried approximately 121.6 million passengers across more than 250 destinations with a fleet of 627 aircraft, employing around 75,871 people on average.

Top Financial Highlights

1. Total revenue reached €33,213 million, reflecting a 3.5% increase from €32,100 million in 2024, indicating steady expansion across core operations.
2. Passenger revenue totaled €28,969 million, rising 2.5% year over year, supported by sustained travel demand and network optimization.
3. Cargo revenue stood at €1,238 million, broadly stable with a modest 0.3% increase, reflecting balanced freight volumes amid evolving trade conditions.
4. Other revenue increased to €3,006 million, up 16.0%, driven by stronger contributions from loyalty programs, holiday services, and maintenance, repair, and overhaul activities.
5. Operating profit before exceptional items reached a record €5,024 million, up 13.1% from €4,443 million, demonstrating improved cost control and operating leverage.
6. Operating margin expanded to 15.1%, up 1.3% points, positioning performance at the top end of the group’s 12% to 15% target range.
7. Profit after tax increased to €3,342 million, reflecting a 22.3% rise from €2,732 million, supported by higher operating earnings.
8. Adjusted earnings per share rose to 69.5 euro cents, up 22.4%, while basic earnings per share increased to 71.3 euro cents, up 28.0%, indicating enhanced shareholder value creation.
9. Free cash flow totaled €3.1 billion, compared to €3.6 billion in 2024, after capital expenditure of €3.4 billion, reflecting continued investment in fleet and infrastructure.
10. Cash and deposits stood at €8,319 million, with total liquidity of €10,948 million, providing financial flexibility.
11. Net debt declined to €5,948 million from €7,517 million, with leverage reduced to 0.8x EBITDA, strengthening the balance sheet position.
12. Return on invested capital improved to 18.5%, up from 17.3%, indicating more efficient capital deployment.
13. The total dividend for 2025 amounted to €448 million or €0.098 per share, representing an 8.9% increase per share.
14. An additional €1.5 billion excess cash return program was announced, beginning with a €500 million share buyback scheduled to be completed by the end of May 2026.

Beat or Miss?

IAG’s reported figures came in slightly ahead of analyst expectations on operating profit, though revenue was broadly in line. The lack of a formal profit guidance number for 2026 weighed on sentiment.

What Leadership Is Saying?

CEO Luis Gallego (Strategy and Vision)

“We reported another year of strong performance in 2025, supported by improvements in on-time operations and customer satisfaction. Operational efficiency contributed to solid financial outcomes, with healthy margins and robust returns on capital. Strategic execution and ongoing transformation initiatives supported adjusted EPS growth of 22.4%. In line with its capital allocation approach, dividend per share increased by 8.9%, and an additional €1.5 billion in excess cash will be returned to shareholders. Management remains positive about future prospects, citing favorable market conditions and long-term growth opportunities.

CFO Nicholas Cadbury (Financials and Margins)

“IAG generated a record operating profit of €5.024 billion, up €581 million year-over-year. Operating margin reached 15.1%, up 1.3 points from the prior year and at the top end of the group’s 12% to 15% target range. The balance sheet remains very strong, with net debt leverage of 0.8x and liquidity above €10 billion. We are returning €1.5 billion of excess cash, which represents roughly 6.5% of market capitalization at current levels.”

Historical Performance

IAG Year-over-Year

A comparison of IAG’s full year 2025 results against the prior year (2024) shows broad-based improvement across profitability metrics, with revenue growth of 3.5% translating into much stronger operating profit growth of 13.1%, thanks to a 6.9% decline in fuel costs.

Segment Profitability

Competitor (Y-O-Y)

IAG’s profitability metrics stand out notably against its European peers. Operating margins of 15.1% are well ahead of both Air France-KLM (6.1%) and Lufthansa Group (approximately 4.3% for FY2024). Ryanair’s fiscal year ends in March, so its most recent comparable full-year period (FY ending March 2025) shows lower profitability on a per-revenue basis despite higher passenger volumes.

2026 Outlook and Modelling Assumptions

IAG provided the following guidance framework for 2026, though stopped short of issuing a formal profit target:

• Capacity growth: Approximately 3% ASK increase, continuing disciplined focus on core markets
• Non-fuel unit costs: Expected to decline around 1%, including a 2-percentage-point benefit from foreign exchange
• Fuel costs: Range from approximately €7.0 billion (December 31, 2025 curve) to €7.4 billion (February 24, 2026 curve), with 62% hedged and additional year-on-year ETS/CORSIA costs of approximately €150 million
• Capital expenditure: Approximately €3.6 billion, depending on fleet deliveries (17 aircraft expected, majority unencumbered)
• Free cash flow: Expected to exceed €3 billion after gross capex
• Shareholder returns: €1.5 billion excess capital return over the next 12 months, starting with a €500 million share buyback; sustainable ordinary dividend with the proposed final dividend of €0.05 per share for 2025

How the Market Reacted?

Despite delivering a record set of results that beat analyst estimates on operating profit, IAG shares fell approximately 5% to 7% on the morning of February 27, 2026, trading down to around 423.70 pence in London. The selloff was attributed to several factors.

Investors were disappointed by the absence of a detailed profit forecast for 2026, with CFO Cadbury citing limited visibility beyond Q1. Concerns about potentially rising fuel costs also weighed on sentiment, as the difference between a December 31 forward curve (approximately €7.0 billion) and a late-February curve (approximately €7.4 billion) highlighted fuel price volatility.

Some analysts also noted that the stock had already risen over 100% from its August 2024 lows, suggesting much of the good news may have been priced in. The overall tone of the results, however, remained firmly positive, with strong Q1 2026 bookings and a planned 3% capacity increase pointing to continued growth.