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International Consolidated Airlines Group, S.A. (ICAGY)
OTHER OTC:ICAGY
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International Consolidated Airlines
(OTC:ICAGY)
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Rating:72Outperform
Price Target:
$10.50
▲(11.94% Upside)
Action:ReiteratedDate:03/02/26
The score is driven mainly by solid fundamentals (improved profitability and strong free cash flow) and supportive earnings-call performance and capital returns. Attractive valuation helps, while the overall score is tempered by balance-sheet leverage risk and a mixed short-term technical picture.
Positive Factors
Strong free cash flow generation
Sustained positive free cash flow through 2022–2025 and a sharp FCF jump in 2025 indicate durable cash conversion. This strengthens capacity to fund aircraft investment, service debt, maintain liquidity and support buybacks/dividends across industry cycles without relying on external financing.
Record profitability and high ROIC
Material margin recovery and a high ROIC demonstrate structural improvement in unit economics and capital allocation. Consistent operating profitability across group airlines supports resilience to cyclical downturns and provides a foundation for sustainable shareholder returns and reinvestment.
High‑margin loyalty and diversified revenue mix
A profitable loyalty business and broad ancillary revenues materially diversify income away from pure ticket yields. Loyalty margins and partner economics provide recurring, high-margin cash flows that increase revenue stability and improve customer retention over the medium term.
Negative Factors
Elevated leverage and rising debt
Relatively high leverage in a cyclical airline sector raises vulnerability to demand shocks, cost shocks or interest rate moves. Even with improved equity and liquidity, rising debt in 2025 reduces balance-sheet flexibility and increases refinancing and covenant risk over the medium term.
Large multi‑year CapEx ramp
A sustained, sizable CapEx program increases execution and timing risk and will pressure free cash flow in future years. Funding heavy fleet investment while managing leverage and cash returns requires disciplined rollout; delays or cost overruns would strain liquidity and returns.
Operational and technical disruptions
Ongoing engine and technical availability issues meaningfully constrain capacity and raise irregularity costs. Persistent equipment outages can depress revenue, erode customer satisfaction and force short‑term lease or replacement spends, harming medium‑term service reliability and margins.
International Consolidated Airlines (ICAGY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$21.50B
Dividend Yield2.05%
Average Volume (3M)17.20K
Price to Earnings (P/E)6.9
Beta (1Y)1.13
Revenue Growth9.38%
EPS Growth21.02%
CountryUS
Employees52,762
SectorIndustrials
Sector Strength72
IndustryAirlines, Airports & Air Services
Share Statistics
EPS (TTM)0.34
Shares Outstanding2,276,099,900
10 Day Avg. Volume25,664
30 Day Avg. Volume17,196
Financial Highlights & Ratios
PEG Ratio0.21
Price to Book (P/B)2.90
Price to Sales (P/S)0.69
P/FCF Ratio7.28
Enterprise Value/Market Cap0.93
Enterprise Value/Revenue0.60
Enterprise Value/Gross Profit2.81
Enterprise Value/Ebitda2.76
Forecast
1Y Price Target
$9.68Price Target Upside3.20% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)1.75
Revenue Forecast (FY)$40.50B
International Consolidated Airlines Business Overview & Revenue Model
Company DescriptionInternational Consolidated Airlines Group, S.A., together with its subsidiaries, engages in the provision of passenger and cargo transportation services in the United Kingdom, Spain, Ireland, the United States, and rest of the world. The company operates under the British Airways, Iberia, Vueling, Aer Lingus, and LEVEL brands. It operates a fleet of 531 aircraft. The company was incorporated in 2009 and is based in Madrid, Spain.
How the Company Makes MoneyIAG primarily makes money by selling air transportation and related services through its operating airlines. Its main revenue stream is passenger revenue from ticket sales across cabins (e.g., economy and premium cabins) on short-haul and long-haul routes; pricing is driven by demand, route networks, seasonality, and capacity management (yield/revenue management). A second key stream is cargo revenue from transporting freight in the belly hold of passenger aircraft and via dedicated cargo offerings where applicable. The group also earns ancillary and other airline-related revenues tied to passenger travel, which commonly include items such as baggage and seat-related charges, onboard sales, change and service fees, and other travel add-ons offered by the airlines; the specific mix varies by brand and market. In addition, IAG benefits from loyalty-related economics via its airline frequent-flyer programs (e.g., Avios-based ecosystems), where value is generated through increased customer retention and, where applicable, the sale of loyalty points and related marketing partnerships with third parties (for example, card issuers and retail partners) and the redemption of points for travel. Operationally, profitability is influenced by major cost factors (not revenue) such as fuel, aircraft ownership/lease costs, labor, airport and air navigation charges, and fleet utilization; network breadth, joint selling, and coordination across group airlines can also affect revenue capture through feeder traffic and schedule connectivity. Significant partnerships and revenue-supporting factors can include code-sharing, alliances, and joint business arrangements that expand network reach and help optimize traffic flows and corporate travel sales; however, specific partnership details not provided here are null.
International Consolidated Airlines Earnings Call Summary
Earnings Call Date:Feb 27, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 08, 2026
Earnings Call Sentiment Positive
The call conveys a strongly positive financial and operational story: record operating profit, elevated margins (15.1%), high ROIC (18.5%), substantial free cash flow, strong liquidity and expanded shareholder returns. Operational improvements (OTP, NPS) and loyalty growth underpin durable earnings. Offsetting risks include fuel price volatility, FX headwinds to revenue in 2026, specific engine/technical disruption affecting capacity, rising ownership and employee costs, and a multi-year CapEx ramp that increases execution risk. On balance, the positive achievements and robust balance-sheet position outweigh the challenges, while management acknowledges and outlines mitigation for headwinds.Q4-2025 Updates
Positive Updates
Record Financial Results
Operating profit EUR 5.024 billion (up EUR 581 million YoY); operating margin 15.1% (up 1.3 percentage points YoY); adjusted profit after tax EUR 3.3 billion (up 17% YoY).
Strong EPS and Shareholder Returns
Adjusted EPS increased 22.4% YoY; share buyback reduced weighted average shares by 4.3%; announced EUR 1.5 billion of excess cash returns (up from EUR 1.0 billion prior year) and total dividend for 2025 of EUR 448 million.
High Return on Invested Capital and Cash Generation
ROIC of 18.5%; free cash flow of EUR 3.1 billion after investing EUR 3.4 billion; liquidity over EUR 10 billion and net debt leverage 0.8x (gross leverage 1.9x).
Outstanding Airline & Loyalty Performances
Iberia operating margin 16.2% with EUR 1.3 billion operating profit toward a EUR 1.4 billion target; British Airways reached 15% margin target; Vueling operating profit EUR 393 million and 12% margin; Aer Lingus margin 11%; IAG Loyalty profit GBP 469 million and ~18% margin (would be >GBP 500m excluding VAT dispute).
Operational and Customer Improvements
British Airways on-time performance (OTP) >80% in 2025 (best since 2014; +20 points vs 2023); improvements in customer Net Promoter Scores and CSAT noted across the group.
Revenue and Regional Trends
Group passenger unit revenue +1% at constant currency (flat reported); North Atlantic unit revenue +1.5% (constant currency) with Q4 improving to +1.8%; Latin America unit revenue +3.3% (constant currency); Asia Pacific unit revenue +4.2% with capacity up 6.4%.
Cost Discipline Despite Investment
Total unit costs improved 0.4%; non-fuel unit costs in line with guidance; supplier CASK rose only 0.8% as transformation initiatives offset inflation; ownership investments (new cabins, lounge upgrades, digital) are driving customer experience improvements.
Sustainability Progress
Sustainable aviation fuel (SAF) usage increased to 3.3% of total fuel (from 1.9% in 2024); reported carbon intensity of 77.5 gCO2 per passenger-km and investment in more efficient aircraft.
Negative Updates
Fuel Price Volatility and Carbon Cost Headwinds
Fuel bill estimate increased from ~EUR 7.0 billion to ~EUR 7.4 billion since year-end due to Middle East tensions; carbon-related costs (ETS and CORSIA) added roughly EUR 150 million YoY.
Operational Disruption from Engine/Technical Issues
Ongoing engine availability issues: GE engine constraints affecting Iberia (A330s); GTF problems grounding ~16 Vueling aircraft on average; some BA 787s grounded — recovery expected gradually (BA 787s hoped recovered by May).
Rising Certain Cost Lines
Employee cost per unit up 3.8% YoY driven by operational investments and incentive payments; ownership costs up 10% reflecting new aircraft, cabin retrofits and lounges; non-fuel unit costs increased 2.8% (partly offset by FX).
FX Headwinds to Revenue in 2026
Pound weakened vs euro and dollar; management warns of a significant FX headwind to revenue in 2026 (particularly H1), even as FX partially benefits cost base in reverse.
Regional & Segment Softness
European unit revenue down 2.1% (constant currency) reflecting a softer summer in parts of Northern Europe; some U.S. point-of-sale economy leisure softness and elevated competition into Dublin and Madrid noted.
CapEx Ramp and Delivery/Timing Risks
CapEx set to rise materially: ~EUR 3.6 billion in 2026, EUR 4.9 billion average (2027–28), and ~EUR 5.6 billion average (2029–31) as large aircraft orders and delayed deliveries materialize — raising execution and timing risk though management expects to remain cash-positive.
VAT / Tax Dispute Cash Impact
IAG Loyalty involved in a VAT dispute with HMRC; payment(s) and timing impacted cash flow (management referenced a ~EUR 450 million cash payment impact and that related matters may not fully reverse until 2027).
Competitive Pressure in Key Hubs
Noted intensified competition into Dublin (notably from U.S. carriers) and increased capacity into Madrid and other secondary European markets that pressured yields in certain periods.
Company Guidance
IAG guided to around 3% capacity growth in 2026 (2–4% medium term) with 17 aircraft deliveries next year and CapEx of ~EUR3.6bn (rising to ~EUR4.9bn in 2027–28 and ~EUR5.6bn in 2029–31 before normalising to ~EUR4.5bn from 2032), noting 71 wide‑body aircraft ordered (≈70% replacements); financially they reported record 2025 operating profit EUR5.024bn (+EUR581m), operating margin 15.1%, adjusted profit after tax EUR3.3bn (+17%), adjusted EPS +22.4%, ROIC 18.5%, free cash flow EUR3.1bn after EUR3.4bn CapEx, net debt leverage 0.8x (gross 1.9x) and liquidity >EUR10bn; fuel hedging was 62% at 31‑Dec (Dec curve implied fuel bill ~EUR7.0bn, current forward curve ~EUR7.4bn) and ETS/CORSIA costs up ~EUR150m; capital allocation: total 2025 dividend EUR448m, share count reduced 4.3% by buybacks, EUR1.5bn excess cash return announced, excess‑cash distribution range widened to 1–1.5x net leverage while targeting net leverage <1.8x and gross 1.5–2x; cost guidance: total unit costs improved 0.4% in 2025, non‑fuel unit costs +2.8% (in line with guidance) and for 2026 expect non‑fuel unit costs ~‑1% (≈+1% on a constant‑currency basis).International Consolidated Airlines Financial Statement Overview
Summary
Strong post-pandemic profitability and cash generation (income statement 74; cash flow 77, with sharply higher 2025 FCF). The key offset is elevated leverage (balance sheet 58) and debt rising again in 2025, which increases risk in a cyclical airline industry.Income Statement
Profitability has materially improved versus 2020–2021, with sustained positive operating profit and net income in 2022–2025. 2024 delivered solid profitability (about 8.5% net margin), and 2025 maintained strong earnings power despite a modest revenue decline (revenue down ~4.1% year over year). However, margins have eased from 2023 to 2024 and gross profit dollars declined in 2025, suggesting some pressure from pricing, costs, or mix.74
Positive
Balance Sheet
Leverage remains a key overhang: total debt is high relative to equity, though the capital position has strengthened meaningfully since 2021–2023 as equity increased and leverage improved (debt-to-equity fell from very elevated levels in 2021–2022 to ~2.8x in 2024). Total debt rose again in 2025 versus 2024, which adds risk if demand weakens or costs rise. Asset base is sizable and relatively stable, but the balance sheet is still more leveraged than ideal for a cyclical airline.58
Neutral
Cash Flow
Cash generation is strong and consistent in the last several years: operating cash flow was robust in 2022–2025 and free cash flow remained positive across the same period. 2025 free cash flow improved sharply (up ~31.9% year over year), indicating better cash conversion and/or disciplined capital spending. A watch item is that 2024 free cash flow was meaningfully below net income (roughly 56%), implying working-capital or investment needs can still absorb cash even in profitable years.77
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 31.90B | 32.10B | 29.45B | 23.07B | 8.46B |
| Gross Profit | 6.82B | 7.58B | 7.91B | 5.36B | 164.00M |
| EBITDA | 7.34B | 6.83B | 4.43B | 2.20B | -2.25B |
| Net Income | 3.21B | 2.73B | 2.65B | 431.00M | -2.93B |
Balance Sheet | |||||
| Total Assets | 42.83B | 43.80B | 37.68B | 39.30B | 34.41B |
| Cash, Cash Equivalents and Short-Term Investments | 8.32B | 9.80B | 6.81B | 9.57B | 7.91B |
| Total Debt | 19.86B | 17.34B | 16.08B | 19.98B | 19.61B |
| Total Liabilities | 35.24B | 37.63B | 34.40B | 37.28B | 33.56B |
| Stockholders Equity | 7.58B | 6.17B | 3.27B | 2.02B | 840.00M |
Cash Flow | |||||
| Free Cash Flow | 3.02B | 3.56B | 1.32B | 960.00M | -885.00M |
| Operating Cash Flow | 6.33B | 6.37B | 4.86B | 4.83B | -141.00M |
| Investing Cash Flow | -2.66B | -2.50B | -3.42B | -3.46B | -181.00M |
| Financing Cash Flow | -4.24B | -1.18B | -5.19B | -56.00M | 2.23B |
International Consolidated Airlines Technical Analysis
Negative
9.38
Price Trends
11.20
Negative
10.90
Negative
10.40
Negative
Market Momentum
-0.55
Positive
32.82
Neutral
2.12
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ICAGY, the sentiment is Negative. The current price of 9.38 is below the 20-day moving average (MA) of 10.77, below the 50-day MA of 11.20, and below the 200-day MA of 10.40, indicating a bearish trend. The MACD of -0.55 indicates Positive momentum. The RSI at 32.82 is Neutral, neither overbought nor oversold. The STOCH value of 2.12 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ICAGY.
International Consolidated Airlines Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $30.63B | 269.96 | 27.85% | 1.37% | 14.75% | 71.73% | |
72 Outperform | $21.50B | 6.85 | 73.24% | 2.05% | 9.38% | 21.02% | |
71 Outperform | $29.20B | 10.91 | 24.13% | ― | 4.24% | 20.29% | |
69 Neutral | $39.74B | 8.99 | 27.63% | 0.96% | 4.33% | -1.58% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
54 Neutral | $19.77B | 50.61 | 5.33% | 1.73% | 0.65% | ― | |
45 Neutral | $6.93B | 25.57 | -2.76% | ― | 1.27% | 118.64% |
* Industrials Sector Average
ICAGY
International Consolidated Airlines
9.47
2.00
26.83%
DAL
Delta Air Lines
64.83
19.47
42.91%
RYAAY
Ryanair Holdings
61.55
14.97
32.14%
LUV
Southwest Airlines
41.12
9.37
29.52%
UAL
United Airlines Holdings
93.19
21.85
30.63%
AAL
American Airlines
10.86
-0.21
-1.90%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.