IAG shares remain close to their 29-year high as investors keep buying 

Why IAG shares are pulling back

Shares in International Consolidated Airlines Group (IAG) retreated last week after climbing to their highest level since 1997 at the end of June, as investors took profits following a remarkable rally that has made the British Airways owner one of Europe's best-performing airline stocks.

The stock eased back from last week's peak at 492.9p - pausing a rally that had seen shares surge over 40% since April and more than double over the past two years – before resuming its ascent at the beginning of this week. IAG thus remains close to multi-decade highs, underlining investor confidence in the group's earnings outlook and capital return programme.

Last week’s retracement appears to reflect profit-taking rather than any fundamental deterioration in the business. After such a rapid ascent, it is not unusual for investors to reassess valuations and reduce exposure, particularly when a stock is trading at levels not seen in nearly 30 years.

For those tracking the share price closely, the key question is whether this represents a healthy pause in an ongoing uptrend or the beginning of a more sustained reversal.

Record profits underpin the rally

The catalyst for IAG's strong performance has been another year of record profitability. The airline group delivered a record operating profit of €5 billion for 2025 as robust premium travel demand, resilient transatlantic traffic and lower fuel costs boosted margins.

Revenue rose to €33.2 billion while operating margins expanded to more than 15%, placing IAG among the most profitable legacy airlines globally. That combination of top-line growth and margin expansion is exactly what investors in the sector want to see.

Management also announced plans to return €1.5 billion to shareholders through dividends and share buybacks, reinforcing confidence in the company's balance sheet after years of deleveraging following the pandemic. The group's net leverage has fallen sharply over recent years, providing financial flexibility to continue rewarding shareholders while investing in fleet renewal and network expansion.

For income-focused investors, the combination of a reinstated dividend and an active buyback programme makes IAG increasingly attractive. You can gain exposure to the stock by buying shares through IG Invest or our share dealing service.

Buybacks continue to provide support

IAG has continued purchasing its own shares under its €500 million buyback programme, providing a supportive technical backdrop for the share price. Corporate buybacks reduce the number of shares in circulation, which can help underpin valuations even during periods of softer market sentiment.

However, recent trading suggests that improving earnings expectations and broader market sentiment remain the primary drivers behind the rally rather than corporate buying activity alone. The buyback represents only a small proportion of overall daily trading volumes in the stock.

That distinction matters for traders assessing near-term price action. Buyback support can slow a decline but is unlikely to arrest a sustained sell-off if the fundamental or macroeconomic backdrop deteriorates.

Understanding the difference between structural support and genuine demand is an important part of analysing shares at elevated valuations. Our share dealing platform gives you the tools to monitor and act on these developments in real time.

Fuel costs remain the biggest risk

Despite the positive outlook, investors remain alert to rising fuel costs. Earlier this year, management cautioned that higher jet fuel prices would weigh on profits during 2026, even though around 70% of expected fuel consumption has been hedged.

The reopening of the Strait of Hormuz and the subsequent retreat in crude oil prices have eased some of those concerns. Lower oil prices feed directly into jet fuel costs, which represent one of the largest line items on any airline's income statement.

Premium travel demand has also remained resilient despite broader economic uncertainty, helping offset softer leisure demand on some North American routes. That resilience in higher-margin cabin classes has been a key factor in IAG's ability to sustain industry-leading operating margins.

However, fuel remains one of the largest variables affecting airline profitability and any renewed spike in commodity prices could quickly erode the margin gains that have driven such strong investor returns over the past two years.

Valuation no longer looks cheap

The strong recent rally has prompted investors to question whether much of the good news is already reflected in the valuation. Although IAG continues to trade at a discount to many US airline peers, analysts note that the gap has narrowed considerably following the stock's surge.

Expectations for further upgrades to medium-term margin guidance and additional shareholder returns have become increasingly embedded in the share price. When positive outcomes are already priced in, the stock becomes more vulnerable to any disappointment, however modest.

With the shares sitting close to three-decade highs, the hurdle for further upside has inevitably risen. That does not mean the rally is over, but it does mean that execution needs to remain close to perfect to justify current levels.

For traders with a view on IAG in either direction, spread betting and CFD trading offer the ability to go long or short on the stock, allowing you to express both bullish and bearish views with leveraged exposure.

Analyst ratings and technical analysis

Five analysts have a ‘strong buy’ recommendation for IAG, eight a ‘buy’ and one a ‘sell’ with a mean long-term price target at 506.92 pence, around 9% above current levels (as of 6 July 2026).

LSEG Data & Analytics

TipRanks has given IAG a ‘7 Neutral’ Smart Score while the analyst consensus is a ‘strong buy.’

TipRanks Smart Score

The IAG share price – up around 15% year-to-date – last week rallied to 492.9p, a level last traded in May 1997 when the airline’s share price hit a record high at 505.8p.

Even with last week’s retracement lower, the IAG share price remained above its pre-Middle East conflict late February high.

IAG daily candlestick chart

Good support below last week’s 465.1p low and the 464.3p late February peak sits between the January-to-early February highs at 449.2p-to-438.6p as well as at the 434.5p late May high.

While the next lower 200-day Simple Moving Average (SMA) and 11 June low at 405.0p-to-400.8p underpin on a daily chart closing basis, the medium-term uptrend in the IAG share price is deemed to be intact.

In case of a new all-time high above 505.8p being made, the 550p region may be reached in the second half of this year.

Focus shifts to second-quarter results

Attention will now turn to IAG's second-quarter results, due at the end of July, where investors will look for evidence that demand remains robust through the peak summer travel season. The summer period is the most important quarter for any airline, and IAG's transatlantic network makes it particularly sensitive to North American travel trends.

Key areas of focus will include booking trends across the North Atlantic, premium cabin demand, fuel cost guidance, free cash flow generation and any update on future capital returns. A strong set of results accompanied by upgraded full-year guidance could quickly reignite bullish momentum.

Following one of the strongest recoveries in European aviation since the pandemic, the recent pullback may simply represent a healthy pause after an exceptional run. However, with expectations now elevated, IAG will need to continue delivering record operational performance to justify trading near levels last seen almost three decades ago.

Whether you're investing for the longer term or trading around the results, you can access IAG through our trading platform across spread betting, CFDs and share dealing.

How to invest in IAG shares

1. Do your research on IAG, the airline sector and the key risks ahead of Q2 results at the end of July
2. Download IG Invest or open a share dealing account with us
3. Search for IAG (IAG) in our platform or app
4. Choose the number of shares or value of money you'd like to invest
5. Place your trade