The trigger has been a combination of more tepid growth in the quarter, declining passenger unit revenue and signs of weakness in the transatlantic corridor. The price had been riding a wave of accumulated optimism. the correction It reflects the gap between what was expected and what was finally presented in the tourist values.
What happened on the trading floor
The action of holding Iberia, British Airways, Vueling, Aer Lingus and LEVEL airlines moved into the area of 4,3–4,4 euros and recorded its worst day in months. At times, the losses approached 10%.making IAG the worst-performing stock on the IBEX.
Although the group noted that it has made significant progress this year, The focus of the session was on the short term: reading the results and fine-tuning the qualitative messages.
Key figures
- Third trimester: revenues of 9.328 billion (flat year-on-year and slightly below consensus), operating profit of 2.053 billion (+2%) and net profit of 1.402 billion (-2,3%).
- Nine months: revenues of 25.234 million (+4,9%), operating profit of 3.931 million (+18,3%) and net profit of 2.703 million (+15,5%).
Regarding costs, IAG pointed to a control of unit cost ex fuel virtually flat in the quarter (+0,2%) and a drop in fuel spending of 8,8%.In terms of capacity, the group grew by 2,6% in the nine months, with occupancy of 88,6%. (1,3 points less), like others tourism sector values.
What is penalizing the market?
The most sensitive point was the evolution of unit passenger revenuewhich fell 2,4% year-on-year in the quarter. The North Atlantic corridor, key to profitability, registered a drop of 7,1% in unit revenue, with approximately half of the impact linked to the exchange rate.
The “normalization” of prices after two strong summers and a slight decrease in the occupancy rateAll of this within a competitive European environment. With high expectations, the lack of guidance improvements and this temporary slowdown have led to... profit collection.
The reaction and messages from the management team
The CEO, Luis GallegoThe company attributed the day's movements to short-term investors and argued that the stock remains undervalued based on fundamentals. The company emphasized that the fourth quarter reserves They show a positive tone and maintain their course of high profit margin at group scale.
Management emphasized the focus on long-term value creation, with disciplined investment to improve customer experience and efficiency, and with a balance sheet prepared to sustain the shareholder remuneration.
What analysts say
For Renta 4, the results were slightly below the consensus in the key operational magnitude, although business performance remains positive; they value the continued guidance and that the advance reservations in the fourth quarter.
Bankinter highlights the healthy balance sheet and liquidity, recent cost relief and still solid demand in key markets, maintaining a constructive outlook despite the geopolitical environment.
RBC emphasizes that the comments of returns to the shareholder They are encouraging and do not foresee any major changes in the expected operating profit for 2025; they see IAG as above the industry average due to capacity in the Atlantic, the product potential of British Airways and additional margin for recovery in business travel.
Peel Hunt estimates margin for more than 3.000 million of capital repayments in future fiscal years and recalls that the dip in unit revenues has been conditioned by the exchange rate and a slightly lower occupancy factor.
Operation and network: punctuality, capacity and mix
On the operational front, British Airways reported a noticeable improvement in punctuality at Heathrow with its new operating model, the best figures in years. The group increased capacity by 2,6% so far this year, with greater traction in Pacific Asiadomestic and Latin America and the Caribbean.
By region, the North Atlantic (about a third of the network) grew in capacity and continued to be led by BA, Iberia and Aer Lingus, while the European environment showed more competition and pressure on the unit revenuesPunctuality and reduced delays help to contain costs and strengthen brand image.
Cash, debt and shareholder returns
Financially, IAG closed September with net leverage of 0,8x and total liquidity of 11.442 billion. Net debt was reduced to 6.009 million, reinforcing the solvency profile.
In capital, the group has practically completed its 1.000 billion buyback program and will pay an interim dividend of 0,048 euros per shareThe management indicated their intention to announce additional returns at the beginning of the year, when it publishes the annual accounts.
Short-term outlook and risks
The company maintains its forecastswith moderately increasing annual capacity, a limited increase in unit costs excluding fuel, and a plan to investment Relevant for fleet renewal. Fuel prices have eased somewhat recently.
Among the risks, IAG points to an environment macroeconomic and geopolitical demanding, to competition on European routes and the sensitivity of the business to the behavior of North AtlanticThe evolution of the exchange rate remains a key variable for unit income.
Meanwhile, the Bloomberg consensus maintains a favorable bias: around the 80% of purchase recommendationswith an average target price of around €5,33 (double-digit potential over 12 months). Some firms, such as Citi (€7,04) or Panmure Liberum (€6,70), have set more ambitious valuations.
The day leaves a clear message: the business is holding up, but the market demands evidence of stabilization in unit revenues and occupancy in the North Atlantic. If year-end bookings confirm this turnaround and cost controls are maintained, the support of the cash and remuneration They offer the shareholder a reasonable floor for the thesis.
