International Airlines Group (IAG), owner of Aer Lingus and British Airways, reported stronger-than-expected annual profit on Tuesday, supported by lower fuel costs and robust demand in premium cabins on transatlantic routes.
The group said it achieved an operating profit before exceptional items of €5.02 billion for 2025, slightly above analysts’ forecast of €4.97 billion and up 13% compared with the previous year. IAG said it carried 121.6 million passengers in 2025, a marginal decline from 122 million in 2024, with British Airways posting a 0.4% increase in passengers to 46.3 million.
Chief Executive Luis Gallego said the performance reflected a rebound in transatlantic demand, particularly in premium and corporate travel. “Since the third quarter, we have seen a rebound,” Gallego said during a media call, adding that bookings for the first quarter of 2026 were strong.
Premium demand has been a key driver for European airlines, even as the market for economy fares in the United States has softened. IAG has strengthened its transatlantic network in recent years, benefiting from ties to both North and South America. However, the group had warned in November of weakness in the economy segment, which had weighed on its share price at the time.
Shares of IAG have since recovered, rising 36% over the past year, although they have been outpaced by Air France-KLM, which has gained 50% over the same period. Other European carriers have also expanded premium offerings, with Lufthansa introducing new high-end seats and Air France-KLM upgrading cabins, lounges, and onboard services to attract affluent travellers.
Finance Director Nicholas Cadbury noted that while 2025 had been strong, visibility for the second and third quarters of 2026 remains limited. Some softness in demand was seen in the Africa and Middle East regions, he said.
IAG also confirmed it would return €1.5 billion to shareholders over the next 12 months, beginning with a €500 million share buyback expected to be completed by the end of May. The group expects capacity growth of around 3% in 2026, with no anticipated delays from aircraft manufacturers Airbus and Boeing.
The company’s other carriers, including Iberia, Vueling, and Level, contributed to the group’s overall performance. While passenger numbers were largely stable year on year, the emphasis on high-yield routes and premium cabins helped offset weaker demand in the economy segment.
Gallego said IAG’s results highlighted the continuing importance of transatlantic business and premium travel, adding that the group would focus on maintaining strong yields while expanding capacity in key markets.
The performance underscores a wider European trend, with airlines increasingly relying on premium demand to drive profitability amid fluctuating economy traffic and global tariff uncertainties.
