The International Consolidated Airlines Group (LSE:IAG) share price has risen an impressive 26% in the year to date. That beats the broader FTSE 100‘s 12% rise, and is all the more remarkable given huge current uncertainty for the airline industry.
Given risks like rising inflation and weak economic growth, additional gains for the British Airways owner may be difficult. But if history is any guide, it’s not outrageous to expect the shares to keep ascending as 2025 draws to a close.
Q4 outperformance
Data from IG Group actually shows that, over the long term, International Consolidated Airlines has delivered three times the return of the UK’s large- and mid-cap shares during the fourth quarter.
Here’s a breakdown of the group”s average share price gain by quarter during the last 20 years:
| Quarter | Share price increase |
|---|---|
| One | 0.39% |
| Two | -2.09% |
| Three | 1.78% |
| Four | 3.93% |
By comparison, the FTSE 350 index has risen by an average of 0.97% in the fourth quarter over the period.
Explaining the outperformance, IG analyst Chris Beauchamp notes that “markets usually respond in autumn, when companies release results and update on future bookings, giving investors the clearest picture and historically the strongest returns“.
IG’s data also shows International Consolidated Airlines’ shares historically outperform the broader airline sector at the end of the calendar year.
This has risen by a lower 3.32% on average during previous fourth quarters going back to 2005. Only Wizz Air* (4.81%), easyJet (4.55%) and Lufthansa (4.16%) have provided better long-term returns in the final quarter.
* Only eight years’ worth of data available for Wizz Air.
Weaker long-term returns
So, am I tempted to buy IAG shares for my own portfolio? As someone who invests for the long term, I’m not tempted to add the airline group to my portfolio, even accounting for the possibility of an end-of-year spurt.
Over a longer period, the average returns on offer have lagged the FTSE 100 by a significant distance. These stand at 2% over the past decade, far below the UK blue-chip index’s 8%.
The share price has actually dropped over that period, from 398p to 382p today. Only sporadic dividend payments over the period have meant a positive return for investors.
Threats to IAG shares
I’m also not convinced that the group can repeat its previous fourth-quarter heroics this year.
Its last financial update in early August demonstrated “robust demand” across its brands during the first six months of the year. But with economic conditions and inflationary pressures worsening since then, I’m fearful of a less encouraging third-quarter update on 7 November that may weigh on the share price.
On top of economic problems in its key US and European markets, the company may also reveal signs of weakening transatlantic travel, as the changing political landscape and immigration rules Stateside deters overseas travellers.
Strong brand power (and especially with British Airways) may help support further strong demand. But given current uncertainties — combined with enduring threats like volatile fuel prices, airport disruption, and fierce competition — the risks of buying IAG shares are too severe for my liking.
