International Consolidated Airlines (LSE: IAG) shares have had a rocky long-term ride. But over the past five years, we’ve seen an impressive 111% gain. So an investor who put £10,000 into the stock back then could now be sitting on shares worth £21,100.
There’d be a little bit in dividend cash to add to that. But with a yield of only 2.1% forecast for the current year, it really has been about share price growth.
A rise like this might seem surprising when we look at other UK-listed airlines. Shares in easyJet have slumped 60% in the same five years. Wizz Air Holdings has done worse, with a painful 78% loss. In tough times for a sector, maybe bigger really is best.
Pausing for breath?
The IAG share price has gone off the boil in 2026, up just 3% year to date. That’s mainly due to an Iran-related dip though. But even with the price of jet fuel through the roof, can IAG get back to its impressive growth path? There are signs it might do exactly that.
We are pleased to report a strong first quarter, in which revenue grew by 1.9% and profit grew by 77.3% to €351 million … IAG is uniquely positioned to navigate the current headwinds created by the Middle East conflict thanks to our leading positions across diverse markets, strong brands, structurally high margins and strong balance sheet.
CEO Luis Gallego during May’s Q1 results
That balance sheet could be key. The airline does carry net debt. But at €5,948m at the end of 2025, it had fallen 43% from €10,385m in 2022. And forecasts show it dropping to just €3,615m by 2028.
Oil shock
We really can’t just overlook the shock of oil prices from the Iran conflict. The company expects its fuel bill for the full year to be about €2bn more than it was in 2025, at around €9bn. But while an extra €2bn cost is nothing to sniff at, this is a company with over €33bn revenue in 2025 — and €5bn operating profit.
And the hit is a lot less than it could have been, as the company has been managing its fuel hedging impressively well.
Yes, it means some pain in 2026. But I wouldn’t let that put me off the long-term potential for a stock like this. And the key thing for me is that, even at this very tough time, IAG’s way more than enough liquidity to get through the short-term crisis.
Headwinds
International Consolidated might have about 70% of its 2026 fuel needs hedged. But all those potential flyers out there can’t say the same for their household energy bills. And how aviation demand plays out in the coming months is a big unknown. It really might take some time to get back on track
I could see IAG shares continuing their current weakness for the rest of the year. But for long-term investors looking beyond the current turmoil, this could be one to consider putting a bit of money on now.
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Alan Oscroft does not hold any positions in the companies mentioned.
