IAG’s loyalty division performed particularly well, with a 17% rise in Avios points issued and a 15% increase in redemptions. British Airways Holidays also saw steady growth, recording an 8% uplift in revenue compared to the previous year. Notably, over 80% of that revenue came from Club members, who typically spend almost a third more than non-members – highlighting the growing value of loyal, high-spending customers.
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IAGInternational Airlines Group (IAG), the parent company of British Airways, Iberia, Vueling, Aer Lingus and LEVEL, has delivered a strong financial performance in the first six months of 2025, as rising travel demand, strategic transformation efforts and improved operational efficiency combined to boost profitability and reduce debt.
Strong Financial Performance Driven by Network and Premium Demand
For the period ending 30 June 2025, IAG reported total revenue of €15.91 billion, reflecting an 8% year-on-year increase. Operating profit before exceptional items surged to €1.88 billion, up 43% from €1.31 billion in the same period last year. The group also saw adjusted earnings per share rise to 26.5 euro cents, compared to 17.3 cents in H1 2024.
The operating margin expanded by nearly three percentage points to 11.8%, demonstrating improved cost control and favourable fuel and currency conditions. These figures underscore IAG’s continued recovery and the resilience of premium travel demand, particularly across the North Atlantic and European markets.
Loyalty and Holiday Units Bolster Performance
IAG’s loyalty division performed particularly well, with a 17% rise in Avios points issued and a 15% increase in redemptions. British Airways Holidays also saw steady growth, recording an 8% uplift in revenue compared to the previous year. Notably, over 80% of that revenue came from Club members, who typically spend almost a third more than non-members – highlighting the growing value of loyal, high-spending customers.
Fleet Investment and Sustainability Progress
During the half-year period, IAG took delivery of 13 new aircraft, including the latest-generation Airbus A321XLRs and Boeing 787-10s. These additions support the group’s long-term capacity plans while offering fuel efficiency and improved customer experience. Capital expenditure totalled €1.69 billion, with further investment planned across fleet modernisation, digital upgrades and airport infrastructure.
On the environmental front, the group continued expanding its use of Sustainable Aviation Fuel (SAF), securing over 200,000 tonnes – a 25% increase year-on-year. IAG also extended its Scope 3 emissions partnership with Microsoft, reinforcing its commitment to decarbonisation across the value chain.
Cash Generation, Debt Reduction and Shareholder Returns
IAG significantly strengthened its balance sheet, reducing net debt to €5.46 billion and bringing its leverage ratio down to 0.7 times EBITDA. The group returned €1.5 billion to shareholders so far in 2025 through a combination of dividends and share buybacks. A €1 billion buyback programme is on track for completion by November, while a sustainable dividend approach remains a central pillar of the group’s capital allocation strategy.
Ratings agency Fitch recently upgraded British Airways’ credit rating to BBB with a stable outlook – the highest ever for the airline – reflecting its enhanced financial position and performance.
CEO Commentary and Outlook
Commenting on the results, IAG Chief Executive Luis Gallego said the performance reflects strong customer demand and the group’s ongoing transformation efforts. While confident in delivering full-year growth, Gallego cautioned that macroeconomic headwinds and geopolitical uncertainty remain. The group now anticipates 2.5% capacity growth in 2025 and has trimmed its non-fuel cost increase forecast to around 3%.
Gallego also raised concerns about potential increases in passenger charges at Heathrow Airport under its expansion plans, warning that significant cost hikes could jeopardise the airport’s global competitiveness despite the group’s general support for additional capacity.
A Solid Foundation for the Future
IAG’s robust first-half results highlight its operational resilience and strategic discipline. With strong travel demand, improving margins, growing loyalty revenues and ongoing investment in fleet and sustainability, the group appears well positioned to navigate the evolving market landscape and deliver long-term value to shareholders.
Source: IAG
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