International Consolidated Airlines Group S.A.

IAG reported first-half 2026 operating profit of EUR 1.757 billion, down EUR 121 million year over year, and an operating margin of 10.9%. In Q2, operating profit was EUR 1.406 billion and the margin was 15.8%, down from 19% last year. Passenger revenue increased EUR 828 million at constant currency in the first half, while fuel unit cost rose 12.5%; cargo revenue fell EUR 23 million. IAG Loyalty profit increased 25% to GBP 239 million, and the business posted a 19.3% margin. Free cash flow was EUR 2.905 billion, up EUR 808 million, and net debt declined to EUR 4.7 billion from EUR 5.9 billion at year-end. Full-year CapEx is now expected to be around EUR 3.4 billion, with 16 aircraft deliveries expected in 2026 and one slipping into 2027. Management reiterated that it expects full-year operating margin to land within the 12% to 15% target range and said around 57% of expected second-half revenue is booked, in line with last year.

Luis Gallego struck a confident but cautious tone, saying the group’s model and strategy are working even amid industry headwinds. He emphasized the strength of IAG’s diversified brand portfolio, disciplined cost control, and ability to preserve margins despite higher fuel and some capacity disruption. He also highlighted ongoing investment in transformation, fleet, digital tools, lounges, and connectivity, framing these as supports for long-term resilience and shareholder returns.

Jose Barrionuevo Urgel focused on margin resilience, cash generation, and balance-sheet strength. He highlighted the 10.9% first-half operating margin, the EUR 769 million of hedging gains in H1, EUR 2.905 billion of free cash flow, and net debt reduction to EUR 4.7 billion, with net leverage at 0.6x and gross leverage at 1.8x. He also said full-year CapEx is now expected at around EUR 3.4 billion, 16 aircraft deliveries are expected this year, and the group remains committed to its priorities of balance-sheet strength, ROIC of 13% to 16%, ordinary dividends, and excess cash returns, with around EUR 800 million already completed of the EUR 1.4 billion buyback program.

Analysts pressed management on capacity cuts, competitive European short-haul conditions, Aer Lingus’s turnaround, the 777X order, and possible consolidation opportunities. Management said full-year capacity is now guided flat, with Middle East route suspensions, aircraft availability issues, and deliberate capacity discipline all contributing; it also said engine issues are improving and more aircraft are operating than last summer. On Aer Lingus, Lynne Embleton said the airline faces a structural revenue and cost challenge, but is cutting head office costs, reducing weaker flying, and pushing product and productivity changes to get the airline back to a 12% operating margin. On fleet and strategic questions, management said the first 777X is expected in 2028, sees the XLR performing very well, and remains open to consolidation opportunities but declined to comment on specific deals.