International Consolidated Airlines Group (IAG), the parent company of British Airways, has announced a €1.5 billion share buyback programme after delivering its strongest post-pandemic performance to date.
The FTSE 100-listed aviation group reported a 22 per cent rise in profit after tax to €3.34 billion, supported by improved pricing power across its airlines. While total passenger numbers across British Airways, Iberia, Aer Lingus and Vueling dipped slightly to 121.5 million in 2025, revenues still climbed 3.5 per cent to €33.2 billion as yields strengthened.
Alongside the buyback, IAG confirmed an 8.9 per cent increase in its dividend. The total annual ordinary dividend of 9.8 eurocents per share will cost approximately €448 million when fully distributed. The group said €500 million of the latest repurchase programme will be completed by the end of May, following last year’s €1 billion buyback initiative.
Share buybacks have become increasingly common among major corporates flush with post-pandemic cash reserves. By reducing the number of shares in circulation, companies can enhance earnings per share and potentially strengthen stock valuations. Earlier this week, Rolls-Royce Holdings revealed plans for a £9 billion share repurchase over three years, underscoring a broader trend among UK-listed groups prioritising shareholder returns.
Only a few years ago, IAG’s outlook appeared far more fragile. During the height of global travel restrictions, the group’s debt burden swelled to nearly €20 billion and its share price fell below £1. The recovery has been marked. With record results and renewed capital returns, the stock is now approaching historic highs, close to the 470p peak last seen in 2018.
Chief executive Luis Gallego attributed the turnaround to disciplined capacity management and improved margins. Operating profit margins reached 16.2 per cent at Iberia and 15.1 per cent at British Airways, levels he described as significantly ahead of global competitors.
Looking ahead, IAG expects to expand capacity by between 2 and 4 per cent annually over the next several years. Growth, however, will be moderated by supply constraints in the aircraft manufacturing sector, where delivery delays are limiting fleet expansion. Many new aircraft orders are expected to replace ageing fleets rather than drive rapid growth.
The North Atlantic remains IAG’s most important market, although growth there has plateaued. The region was broadly flat last year, with signs of softer outbound demand from US travellers during the summer peak. The group now considers the North Atlantic a mature market, forecasting only low single-digit expansion in the near term.
By contrast, the South Atlantic offers stronger prospects, with mid-single-digit growth expected as IAG leverages its established leadership position. Within Europe, short-haul services account for more than a third of group activity but continue to face cost pressures and subdued demand in northern markets.
Despite these headwinds, IAG’s latest performance signals a company that has moved decisively beyond crisis recovery into a phase of capital discipline, margin optimisation and sustained investor returns.
