IAG Profits Soar as British Airways Owner Announces €14 Billion Euro Shareholder Return

IAG, the parent company of British Airways, has unveiled plans to return €1.435 billion to shareholders following an exceptional Christmas trading quarter where profits nearly doubled to €1 billion. The announcement marks a remarkable turnaround for the FTSE 100 aviation giant, which has emerged from the pandemic’s financial turbulence to achieve record revenues.

The group’s ambitious capital return programme includes a €1 billion share buyback initiative and a total dividend of 9 euro cents per share, amounting to €435 million. This strategic move has propelled IAG’s share price towards its highest levels since the Covid-19 downturn, with the stock rising 13½p to 352¼p, valuing the company at £17 billion.

IAG’s fourth-quarter performance exceeded market expectations, with revenues climbing 11% to €8 billion. The group’s operating profits reached €961 million, representing a substantial increase from €502 million in the corresponding period last year. This robust performance stands in stark contrast to European low-cost carriers, with Ryanair reporting modest profits and easyJet remaining unprofitable during the same period.

The transformation of IAG’s business model has been particularly noteworthy. While corporate travel remains at 85% of pre-pandemic levels, the group has successfully pivoted towards leisure travellers, especially in premium economy cabins. British Airways plans to increase premium economy seating capacity by 20% in response to growing consumer demand for enhanced travel experiences.

Load factors across the group’s airlines have improved significantly, with British Airways achieving 85.2% capacity utilisation, up from 83.6% in both 2023 and pre-pandemic 2019. This operational efficiency has contributed to the group’s impressive profit margins, which have expanded from 11.9% to 13.8%.

Chief Executive Luis Gallego expressed confidence in the group’s trajectory, stating, “We are delivering world-class margins and returns. Strong customer demand continues.” The group’s robust cash generation of €3.5 billion has enabled significant debt reduction, with net debt falling from €9.2 billion to €7.5 billion, whilst maintaining substantial investment in fleet modernisation and operational improvements.