London, Feb 27, 2026, 11:33 GMT — Regular session
- IAG shares dropped in London following the airline group’s full-year earnings and announcement of a cash return scheme.
- Profit came in ahead of forecasts for the airline group, with strong transatlantic premium demand still holding steady.
- Investors are eyeing 2026 capacity and costs, with the next update due in May.
International Consolidated Airlines Group S.A. (IAG) shares slid 5.3% to 433.2 pence in London, erasing gains from a two-day rally that had just sent the stock to new highs.
Shares slipped even as British Airways owner IAG posted an annual profit ahead of expectations and laid out plans to hand 1.5 billion euros back to shareholders within a year, kicking off with a 500 million euro buyback. CEO Luis Gallego pointed to solid demand from premium and corporate travelers. Finance chief Nicholas Cadbury, though, noted there’s “little visibility” looking into the second and third quarters. Reuters
Why it matters now: With airlines, shares have been moving on hints about future demand rather than past results. Investors aren’t hesitating to knock stocks down if guidance suggests growth could stall. Sure, a hefty buyback is supportive, but it doesn’t answer how much longer strength in premium fares can make up for weaker demand from budget travelers.
IAG reported a 3.5% bump in revenue to 33.213 billion euros for 2025, while operating profit before exceptional items climbed 13.1% to 5.024 billion euros. The group is targeting about 3% capacity growth for 2026, using available seat kilometres (ASKs) as its yardstick. Non-fuel unit costs are expected to edge down by roughly 1%. For fuel, IAG outlined potential costs in the 7.0-7.4 billion euro range this year, with 62% of the book hedged. 2025 marked “another year of exceptional performance,” CEO Gallego said, adding that the group feels “confident” as it looks toward 2026. IAIR Group
IAG has proposed a final dividend of 0.05 euros per share, according to a separate filing, which would bring the full 2025 dividend to 0.098 euros. The company also outlined a payment schedule beginning June 29, pending approval by shareholders at the annual meeting.
Richard Hunter, head of markets at interactive investor, called the new buyback programme a sign of “management confidence” coming off robust earnings and cash flow. Still, he flagged the same old airline headaches: competition, the economy, and fuel costs never really disappear. Interactive Investor
Still, that equation isn’t locked in. If economic demand on North Atlantic routes falters again, or fuel costs suddenly spike, margins could get pinched fast. New operational hiccups would only add to the pressure, particularly since management has already flagged that visibility past the first quarter is limited.
IAG’s first-quarter update arrives on May 8. Investors are watching to see if the pace of bookings seen earlier this year is sticking as summer sales ramp up.
