International Consolidated Airlines Group S.A

IAG.LSE

Raymond James cuts airline estimates on higher fuel, upgrades Allegiant

Raymond James lowered estimates across its airline coverage universe, citing a higher jet fuel price forecast, while upgrading Allegiant Travel to Strong Buy from Outperform. The broker raised its jet fuel price forecast for the second half of 2026, 2027 and 2028 by roughly 18%, 14% and 7%, respectively, with Gulf Coast jet fuel prices up 39% quarter-to-date through August 19. Analyst Savanthi Syth said the higher fuel forecast primarily reflects elevated refining margin assumptions rather than crude prices, and pointed to Allegiant's greater quarter-to-date share pullback despite a constructive backdrop excluding fuel. U.S. TSA throughput has run about 2.6% lower year-over-year quarter-to-date versus a 1.1% decline in scheduled seats, while Raymond James raised its fourth-quarter U.S. domestic capacity growth forecast to 2.3% from 1.5% in early August. In Europe, intra-Europe seat capacity is up about 5% year-over-year over the summer, and Syth expects a favorable supply inflection heading into winter as fuel-hedge rolloffs and earnings pressure prompt capacity discipline at Ryanair, easyJet, AF-KLM, IAG and Lufthansa.

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FTSE closes down 0.3% but posts weekly and monthly gains, buoyed by earnings

The London stock market closed lower on Friday but still managed to advance both for the week and the month, with the FTSE 100 index ending at 10,868.05 points, down 29.22 points or 0.27 percent, after retreating from record highs amid support from strong corporate earnings. NatWest shares jumped 3.2 percent after reporting first-half pre-tax operating profit of 4.3 billion pounds, beating expectations, and Sainsbury’s shares edged up 1 percent after agreeing to sell Argos for at least 120 million pounds. Meanwhile, IAG shares fell 1.5 percent after cutting its 2026 capacity guidance. Energy stocks rose 1.9 percent as Brent crude oil prices surged above 90 US dollars per barrel, pushing the sector to a gain of more than 15 percent in July. The Bank of England voted to hold interest rates, but three policymakers dissented, more than the market had expected, amid concerns over the economic impact of the conflict with Iran.

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IAG Loyalty Operating Profit Rises 48 Million Pounds to 239 Million Pounds

International Consolidated Airlines Group reported first-half results with an operating profit of EUR1.757 billion, down EUR121 million year-on-year, and an operating margin of 10.9%. IAG Loyalty, a sub-component of the group, saw its operating profit rise by 48 million pounds to 239 million pounds, achieving a margin of 19.3%. The group's overall revenue grew 1.0%, with passenger revenue increasing by EUR828 million at constant currency, while cargo revenue fell EUR23 million. Fuel unit costs rose 12.5% due to higher commodity prices, and non-fuel unit costs decreased 1.3%. Net debt was reduced to EUR4.7 billion, down from EUR5.9 billion at the end of last year, with net leverage at 0.6 times.

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IAG profits down more than a third after fuel cost hit

International Airlines Group, the parent company of British Airways, reported a slump in pre-tax profits of more than a third for the second quarter, falling to 995 million euro from 1.5 billion euro a year earlier. The decline was driven by a 23% spike in combined fuel costs and emissions charges, which rose by 413 million euro, linked to the conflict in the Middle East. Revenue was stable at 8.9 billion euro, while operating profit dropped 25% to 1.3 billion euro. Chief Executive Luis Gallego said the group has excellent fundamentals and is well positioned to deal with near-term headwinds, with demand for travel expected to remain strong. For the first half, pre-tax profits fell 19% to 1.4 billion euro on revenue of 16.1 billion euro, as 57.9 million passengers flew on its airlines, which also include Iberia, Vueling, and Level.

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Aerospace & Aviation▲

British Airways selects Pratt & Whitney GTF engines for up to 63 Airbus A320neo aircraft

British Airways has chosen Pratt & Whitney GTF engines to power 33 firm and 30 option Airbus A320neo aircraft, with deliveries expected to begin in 2027. The selection includes a 12-year EngineWise Comprehensive services agreement for maintenance. Pratt & Whitney, an RTX business, says the GTF engine offers 20% lower fuel consumption and a 75% smaller noise footprint compared to prior-generation engines. The GTF Advantage engine, entering service later this year, will provide up to twice the time on wing and more range capability.

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FTSE 100 Closes Down 0.71% as Middle East Tensions Overshadow New Prime Minister Boost

The London stock market closed lower on Monday, with the FTSE 100 index falling 75.61 points, or 0.71%, to end at 10,524.76 points, marking its biggest daily drop in about two weeks. Ongoing tensions between the United States and Iran continued to undermine global investment confidence, leading to a muted market response to Andy Burnham becoming the seventh prime minister of the United Kingdom in 10 years. Housebuilders slid 3.5%, the most among the main FTSE 350 sectors, while long-dated UK government bond yields rose, with the 30-year yield hitting a two-month high. Utilities fell 1.4%, and pharmaceuticals and biotechnology dropped 1.6%, with AstraZeneca down 1.7%. Banks lost 0.7%, and industrial metals miners declined 1.1%. Airline stocks came under selling pressure after Ryanair reported a one-third drop in quarterly profit, with Wizz Air tumbling 2.9%, while IAG and easyJet both fell 1.4%. Computacenter surged 5.6% after Berenberg upgraded its rating from hold to buy.

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Defense & Geopolitical Fragmentation

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IAG CEO Warns EU Antitrust Rules Make easyJet Takeover Non-Viable

International Airlines Group CEO Luis Gallego warned that European Union competition rules make an imminent bid for easyJet practically non-viable, dealing a blow to takeover hopes ahead of a June 26 regulatory deadline for US private credit firm Castlelake to table a formal offer. Gallego said evaluating an acquisition of easyJet remains theoretically possible but navigating the European Commission's antitrust architecture is extraordinarily difficult due to severe route overlaps across Western European corridors. Castlelake cannot execute a solo buyout without partnering with a European carrier to maintain majority local voting control, but IAG is pulling back and Air France-KLM signaled they are not actively engaged in talks with the American group. easyJet shares slipped 0.5% to 501 pence on Thursday, still carrying a 26% takeover premium from late May, while the carrier posted a £552 million pre-tax loss for the first half of the financial year. If the June 26 deadline lapses without a firm offer, the takeover premium is expected to evaporate and trigger a sharp correction toward the 400 pence floor.

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