International Airlines Group (IAG) has reported a 26.4% increase in its profit before tax, totalling €4.5bn in the year to 31 December.

The firm, which owns airlines including British Airways and Aer Lingus, said that its strong operational performance in this period led to its record financial performance.

IAG saw its revenue grow by 3.5% to €33.2bn, while its operating profit increased by 13.1% to just over €5bn.

Furthermore, its earnings per shares jumped by 22.4% to 69.5 cents per share and in the current year, it will return €1.5bn to shareholders, starting with a €500m share buyback, which will complete in May.

IAG said that the performance highlights the demand for travel and the attractive nature of its core markets, brands and customers.

Chief executive officer at IAG, Luis Gallego, stated: "We reported another year of exceptional performance in 2025, delivering for our customers with continued improvements in on-time performance and customer satisfaction.

"This sector-leading operational performance is translating into world-class financial results, with outstanding margins and superior return on capital. Execution of our strategy and transformation programme is creating value for shareholders, with adjusted EPS growth of 22.4% and, in line with our disciplined capital allocation framework, we have grown the dividend per share by 8.9% and are announcing today a further return of excess cash of €1.5bn."

The firm has stated that it is positively positioned for 2026, with its outlook for travel trends continuing to be supportive, especially in its core markets.

It said it will continue to deliver revenue and earnings growth at high margins and high return on capital, alongside significant cash flow leading to a stronger balance sheet.

IAG added that with its share buyback across the year, it is confident in creating value for its shareholders in the long-term.

However, following this update, shares in the company fell by over 5%.

Equity analyst at Hargreaves Lansdown, Aarin Chiekrie, said that the group’s networks, strong brands and operational focus "continue to drive performance skyward".

He concluded: "Passenger revenue growth was broadly in line with the group’s increased capacity, while ticket prices held firm. On the cost side, fuel represents the largest single expense for an airline and easing fuel prices have provided a strong tailwind for the bottom line, with fuel costs falling nearly 7%.

"Looking ahead, capital expenditure is set to ramp up over the coming years as IAG looks to expand its fleet and upgrade its digital infrastructure. That should see capacity grow between 2-4% annually over the next few years. There’s plenty of free cash flow pumping through the business to fund these investments, with some left over, allowing management to boost shareholder returns with dividend payment up 8.9% alongside a new €1.5bn share buyback programme.

"IAG remains a cut above most of the competition operationally. Despite the run-up in share price over the last year or so, the valuation still looks attractive thanks to its impressive profit growth. With a strong balance sheet, market position and generous shareholder returns, there still looks to be some upside on offer, so the gates haven’t closed yet for investors looking to get on board."

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