Oct 25, 2025
3 min read
IAG will reduce its leverage ratio below its target range and have plenty of liquidity to buy back 10% of its outstanding shares.
IAM has the power to recapitalize EUR 2,000 million, 10% of its capital
IAG will reduce its leverage ratio below the target range and have sufficient liquidity to repurchase 10% of its outstanding shares.
The airline group improved in the winter with expectations for the season of the year, in which the company can do the weakest business with Goldman Sachs.
The US bank has just initiated coverage of the airline group with a buy rating and a price target of €5.4 per share.stock, representing a potential upside of 20%, eight points above Bloomberg's current consensus estimate.
“We expect the next repurchase program to be announced after the third quarter results,” anticipates Goldman Sachs, a figure that represents approximately 10% of the group's capitalization.
Iag has an adequate capital return margin
This percentage of repurchasing outstanding shares is already a significant catalyst.It also reflects IAG's ability to grow its business and provide returns to shareholders.
In fact, the cash surplus allowed IAG to end the year with net debt to EBITDA of 0.9x, below the target range of 1.2 to 1.5x calculated by Bank of America.
This means that IAG will need 0.3 times his EBITDA to fund the bayback program without compromising his financial stability, although analysts appreciate it will be 0.26 times.
In addition, Goldman Sachs is responsible for the generation of free cash flow of 2,000 million until 2026, which will continue to support the stock and the reinvestors.
With the "small" small plate, the child allowance is estimated that the IG can return between 11% and 12% of the annual funding during the year.
Strength in the Atlantic
Looking to the end of the year, analysts expect IAG's business to improve thanks to transatlantic routes and increased corporate travel.
In the US market, sector leaders such as Delta and United Airlines are reporting "strong acceleration in sales and significant improvement in corporate travel", indicating a clear increase in demand that can be extrapolated to IAG itself.
In this framework, IAAG will benefit from its high exposure to the premium segment, which accounts for 43% of its earnings, and London is the market with the highest concentration of high-net-worth passengers in Europe.
IAAG provides Iberia Connect
IAG shares were particularly favored last session, following news that the company was preparing to launch Iberia Connect, a new brand to replace Iberia Express, and accelerating synergies with Air Nostrum, as reported by Digital Economy.
The Spanish airline group wants to end the conflict with Iberia Express workers and create a brand that deepens cooperation in infrastructure and costs with franchisee Air Nostrum.
"A priori it may be a good solution in the short term, but we will have to wait for the events to see all the implications," market sources explained.
Weight and risk management
Despite an 84% rally over the past year, Goldman Sachs believes IAG shares remain undervalued relative to their European peers.
"While Ryanair trades at twelve times earnings, IAG trades at less than half, although the short-term outlook is better," compare analysts.
La entidad estadounidense destaca además el “menor crecimiento de la flota de largo radio” previsto para los próximos años, que contribuirá a sostener la rentabilidad y evitar una sobreoferta estructural en el mercado atlántico.
Among the risk factors, Goldman points to a possible cooling of travel demand, competitive pressure or a new escalation in fuel costs.
However, the bank is also confident that airlines can adjust their margins, supported by capacity management, investment in the efficiency and weakness of the dollar.
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