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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:78Outperform
Price Target:
$13.00
▲(7.62% Upside)
Action:ReiteratedDate:11/07/25
International Consolidated Airlines demonstrates strong financial performance and operational efficiency, supported by a positive earnings call. The stock's valuation suggests it is undervalued, making it an attractive investment opportunity. Technical indicators show neutral to moderate bullish momentum, reinforcing the positive outlook.
Positive Factors
Diversified revenue streams & loyalty program
A multi-pronged revenue model — ticketing, ancillaries, cargo and the Avios loyalty platform — creates recurring, higher-margin revenue and third-party partnerships. This enhances customer retention, cross-sell and revenue visibility, supporting durable cash generation and margin resilience.
Strong cash flow generation
Material FCF growth and operating cash well above net income indicate the business converts earnings into cash reliably. This supports long-term debt servicing, reinvestment and shareholder returns, improving strategic flexibility despite cyclical industry pressures.
Robust operating margins and profitability
Sustained double-digit EBIT/EBITDA margins and healthy net margins reflect structural cost control, ancillary revenue capture and pricing power. Margin durability supports reinvestment capacity and cushioning versus fuel or demand shocks, underpinning long-term profitability.
Negative Factors
High leverage on balance sheet
A high debt-to-equity ratio raises interest and refinancing risk, constraining strategic options in downturns. Elevated leverage can amplify stress from demand or fuel shocks, making prudent deleveraging and cash allocation critical for maintaining financial stability over months to years.
Cargo revenue volatility
Cargo performance is exposed to episodic disruptions and yield cycles; recent decline shows sensitivity to transitory events. Persistent volatility in cargo undermines diversification benefits and can cause swings in total revenue and capacity planning over a multi-quarter horizon.
Regional demand softness and brand profit dips
Notable weakness in key markets and weaker profitability at specific airlines signal exposure to regional demand shifts, currency headwinds and competitive leisure mix. Concentration in these routes or brands can pressure consolidated revenue and require structural network or product adjustments.
International Consolidated Airlines (ICAGY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$26.86B
Dividend Yield2.05%
Average Volume (3M)10.90K
Price to Earnings (P/E)8.3
Beta (1Y)1.04
Revenue Growth9.38%
EPS Growth21.02%
CountryUS
Employees52,762
SectorIndustrials
Sector Strength72
IndustryAirlines, Airports & Air Services
Share Statistics
EPS (TTM)0.34
Shares Outstanding2,282,564,000
10 Day Avg. Volume17,618
30 Day Avg. Volume10,900
Financial Highlights & Ratios
PEG Ratio3.80
Price to Book (P/B)3.30
Price to Sales (P/S)0.63
P/FCF Ratio5.73
Enterprise Value/Market Cap1.14
Enterprise Value/Revenue0.92
Enterprise Value/Gross Profit3.78
Enterprise Value/Ebitda4.82
Forecast
1Y Price Target
$9.72Price Target Upside-19.54% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)1.77
Revenue Forecast (FY)$40.53B
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 MoneyInternational Consolidated Airlines Group generates revenue primarily through the sale of passenger tickets and cargo services. The company has multiple key revenue streams, including passenger revenue from ticket sales, additional income from ancillary services such as baggage fees, seat upgrades, and in-flight purchases, as well as cargo revenue from freight services. Furthermore, ICAGY benefits from its loyalty programs, such as Avios, which encourage customer retention and provide additional sales opportunities through partnerships with hotels, car rental services, and other travel-related businesses. Strategic partnerships, alliances, and codeshare agreements with other airlines also contribute significantly to its revenue by expanding its network and customer base.
International Consolidated Airlines Earnings Call Summary
Earnings Call Date:Feb 27, 2026
(Q4-2025)
| 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
International Consolidated Airlines has shown strong financial recovery with significant revenue and profit growth. The company demonstrates robust operational efficiency and profitability, supported by effective cash flow management. However, the high debt-to-equity ratio suggests a need for prudent financial management to ensure long-term stability.Income Statement
International Consolidated Airlines has demonstrated a substantial recovery in its financial performance, with total revenue growing from $29.45 billion in 2023 to $32.1 billion in 2024, resulting in a revenue growth rate of 8.73%. The gross profit margin stands at 23.61%, while the net profit margin is 8.51%, indicating strong profitability relative to revenue. The EBIT margin of 13.34% and EBITDA margin of 21.27% further highlight efficient operations and cost management. These metrics reflect robust profitability and a positive growth trajectory, positioning the company strongly in the transportation sector.85
Very Positive
Balance Sheet
The company's balance sheet is marked by a relatively high debt-to-equity ratio of 2.81, reflecting significant leverage, which poses potential risks in terms of financial stability. However, the return on equity (ROE) is impressive at 44.26%, signaling effective use of equity to generate profits. The equity ratio of 14.09% indicates a moderate level of shareholder equity in relation to total assets. The company's ability to manage its liabilities and equity efficiently is evident, though the high leverage warrants careful monitoring to mitigate risks.72
Positive
Cash Flow
International Consolidated Airlines showcases strong cash flow management, with a free cash flow growth rate of 169.39% from 2023 to 2024. The operating cash flow to net income ratio is 2.33, reflecting robust cash generation relative to net income, while the free cash flow to net income ratio of 1.30 indicates healthy cash flow available for investment and debt repayment. These metrics underscore the company's strong cash position and ability to support its operations and strategic initiatives.78
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 33.28B | 32.10B | 29.45B | 23.07B | 8.46B | 7.81B |
| Gross Profit | 8.13B | 7.58B | 7.91B | 5.36B | 164.00M | -1.10B |
| EBITDA | 6.37B | 6.83B | 4.43B | 2.20B | -2.25B | -3.56B |
| Net Income | 3.13B | 2.73B | 2.65B | 431.00M | -2.93B | -6.93B |
Balance Sheet | ||||||
| Total Assets | 43.99B | 43.80B | 37.68B | 39.30B | 34.41B | 30.26B |
| Cash, Cash Equivalents and Short-Term Investments | 9.35B | 9.80B | 6.81B | 9.57B | 7.91B | 5.88B |
| Total Debt | 14.81B | 17.34B | 16.08B | 19.98B | 19.61B | 15.68B |
| Total Liabilities | 38.03B | 37.63B | 34.40B | 37.28B | 33.56B | 28.95B |
| Stockholders Equity | 5.95B | 6.17B | 3.27B | 2.02B | 840.00M | 1.60B |
Cash Flow | ||||||
| Free Cash Flow | 2.29B | 3.56B | 1.32B | 960.00M | -885.00M | -5.24B |
| Operating Cash Flow | 4.14B | 6.37B | 4.86B | 4.83B | -141.00M | -3.30B |
| Investing Cash Flow | -1.83B | -2.50B | -3.42B | -3.46B | -181.00M | 1.56B |
| Financing Cash Flow | -2.82B | -1.18B | -5.19B | -56.00M | 2.23B | 3.81B |
International Consolidated Airlines Technical Analysis
Positive
12.08
Price Trends
11.49
Positive
10.97
Positive
10.31
Positive
Market Momentum
0.17
Negative
61.91
Neutral
76.39
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ICAGY, the sentiment is Positive. The current price of 12.08 is above the 20-day moving average (MA) of 11.81, above the 50-day MA of 11.49, and above the 200-day MA of 10.31, indicating a bullish trend. The MACD of 0.17 indicates Negative momentum. The RSI at 61.91 is Neutral, neither overbought nor oversold. The STOCH value of 76.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
78 Outperform | $26.86B | 8.35 | 56.20% | 2.05% | 9.38% | 21.02% | |
73 Outperform | $33.51B | 13.23 | 28.00% | 1.37% | 14.75% | 71.73% | |
71 Outperform | $36.42B | 11.03 | 23.99% | ― | 4.24% | 20.29% | |
70 Outperform | $45.22B | 9.05 | 27.70% | 0.96% | 4.33% | -1.58% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | $24.88B | 63.93 | 4.82% | 1.73% | 0.65% | ― | |
47 Neutral | $8.68B | 80.19 | ― | ― | 1.27% | 118.64% |
* Industrials Sector Average
ICAGY
International Consolidated Airlines
12.36
3.98
47.59%
DAL
Delta Air Lines
70.51
11.49
19.46%
RYAAY
Ryanair Holdings
69.63
22.39
47.41%
LUV
Southwest Airlines
50.93
20.95
69.85%
UAL
United Airlines Holdings
116.43
24.26
26.32%
AAL
American Airlines
13.94
-0.59
-4.06%
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.