After a blistering few years, the buzz around International Consolidated Airlines (LSE:IAG) shares has cooled sharply in 2025. Though trading remains robust, fears of a sharp slowdown in the global travel market have pushed the stock lower.
At 296.2p, the airline company’s share price is down fractionally (2.1%) since the turn of the year.
However, the release of forecast-beating trading numbers on Friday (9 May) has fed speculation that markets are excessively bearish on the FTSE 100 firm. It’s prompted thoughts about whether the City’s growth forecasts for the shares could receive a large dose of jet fuel.
Strong results
For the three months to March, International Consolidated said that revenues increased 9.6% to €7bn. It celebrated “good demand for air travel across our core markets and for our brands“, describing conditions in North America as “robust” and those in Latin America and Europe as “strong“.
It also noted that sales of its premium cabins were strong.
Boosted by a fall in fuel costs, the company’s operating profit leapt to €198m from €68m in the same 2024 quarter. Its operating margin improved to 2.8% from 1.1% over the period.
Solid forward bookings suggest the British Airways owner can maintain this momentum in the months ahead, too. It was around 80% booked for the current quarter as of 6 May, with turnover ahead of last year.
The flying group was also 29% booked for the second half, matching levels recorded at the same point in 2024.
Upgrades coming?
Following its forecast-beating update, there’s a good chance City forecasts for the short-to-medium term may be upgraded. Current estimates be seen below:
| Year | Predicted earnings per share | Earnings growth | Price-to-earnings (P/E) ratio |
|---|---|---|---|
| 2025 | 62 euro cents | 12% | 5.5 times |
| 2026 | 65 euro cents | 5% | 5.2 times |
| 2027 | 73.9 euro cents | 13% | 4.6 times |
The FTSE firm has multiple tricks up its sleeve that are driving its industry-leading recent performances.
British Airways — which was cited as performing especially strongly in the first quarter — has considerable brand power that attracts a loyal customer base. If you’re travelling many hours in a cramped tin can, you want to know that you’ll be travelling comfortably. BA makes this possible.
Its larger premium offering is also driving revenues higher in the tough climate.
Are the shares a buy?
Yet, despite the company’s impressive resilience, I’m not tempted to invest just yet. That’s even though the share price looks dirt cheap at current levels.
In fact, I believe the leisure giant’s cheapness reflects the array of risks it faces.
In the near term, I’m sceptical as to whether it can continue defying gravity as trade tariffs cool the global economy, and with it spending on luxury items like holidays. Both Delta and American Airlines have dropped their forecasts in recent weeks in a sign of growing pressure.
International Consolidated’s lucrative transatlantic routes also face mounting pressure as the number of travellers to the US slides. According to Tourism Economics, overseas arrivals to the States slumped 11.6% in March due to “global fallout from the intensified ‘America First’ stance“.
I’m also turned off by other more evergreen threats facing its top and bottom lines. Fuel cost spikes, airport disruptions, and rising competition pose risks now and over the long term.
So despite an impressive first quarter, I’d still rather find other UK shares to buy.
