By Bankinter
The airline presented its Q1 2026 results this morning, showing solid demand but lower guidance for the year due to higher fuel costs.
The figures for the quarter were as follows: Revenue €7,181m (up 1.9% year-on-year) compared to €7,159m estimated by the analyst consensus; Net profit of €301m (up 71%) compared to the estimated €101.4m; Capacity (available seat-kilometres, ASK): 79.317 million (up 0.2%); Load factor: 84.2% (compared to 82.7% in Q1 2025); Passengers: 26.394 million compared to 26.178 million in Q1 2025. Unit revenue per passenger (available seat-kilometres) rose to €7.85 (3.5% increase). Costs moderated during the quarter: Maintenance (down 14.5%), Property and other costs (down 4.3%) and Commercial expenses (down 2.0%), which offset the slight increase in Fuel (up 1.2%). As a result, total operating expenses fell by 0.2%, compared with a 1.9% increase in revenue. The trend of reducing Net Debt continues, down to €4,183m against €5,948m at the end of 2025, bringing the Net Debt/EBITDA ratio to 0.5x against 0.8x. It has a liquidity position of €10,061m against €8,319m in Q1 2025. Dividend: reaffirms the remaining share buybacks of €1,000 million this year until the end of February 2027 (5.6% of market capitalisation). We estimate a year-end dividend yield of 2.1%. Link to Results.
Analysts’ view: IAG has reported results with several positive aspects: (i) revenue is rising and costs are falling, even despite higher fuel costs, enabling a significant increase in net profit (71%) (ii) Its balance sheet remains healthy: it has once again reduced its Net Financial Debt, enabling it to bring its NFD/EBITDA ratio to 0.5x compared to 0.8x at the end of 2025. (iii) It has partially passed on the higher fuel costs through an increase in ticket prices (revenue per passenger up 3.5%). (iv) Its market share in the Middle East stood at 3% of its total capacity prior to the war, and it has managed to reallocate this capacity to other regions. Despite all this, we expect a negative trend in results because: (i) The impact of the war in Q1 2026 has been limited, but is expected to be greater in Q2 2026. (ii) Guidance has worsened: free cash flow generation will be lower this year; an estimate of €3,000 million was published at the end of February. Investment will also be reduced to €3.5 billion from the €3.6 billion previously announced. Finally, and as a result of the rise in oil prices, profit is expected to fall because fuel costs could rise by €2,000m to €9,000m. (iii) The load factor is improving overall, but shows some weakness in the North Atlantic (revenue per passenger is falling). For these reasons, we estimate that the impact of these results will be negative, but temporary. Once the war ends, which we hope will be soon, the share price should benefit.
