IAG Q3 Results Show Transatlantic Weakness
IAG Q3 results showed transatlantic weakness and FX headwinds that hit unit revenue and drove an 8% drop, forcing traders to reassess near-term demand.
KEY TAKEAWAYS
- IAG Q3 revealed transatlantic weakness that pressured unit revenue and triggered a sharp market selloff.
- North Atlantic unit revenue fell 7.1% and overall passenger unit revenue declined 2.4% year-on-year.
- Management kept full-year guidance and scheduled a shareholder-returns update for Feb. 2026.
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International Consolidated Airlines Group (IAG) reported Q3 results on Nov. 7, 2025, revealing transatlantic weakness and currency headwinds that pressured unit revenue. Despite this, management maintained its full-year outlook, though the disclosures triggered a sharp market reaction.
Q3 Results and Market Reaction
IAG posted an operating profit of €2.1 billion for Q3 2025, up 2.0% year-on-year, with revenue steady at €9.3 billion. Both figures aligned broadly with consensus but fell slightly short of analyst expectations. Shares dropped more than 8% after the results and the company’s disclosure of softness on transatlantic routes, according to Reuters.
Transatlantic Demand and Outlook
Passenger load factor declined across all regions, led by a 2.4-point drop on North Atlantic routes. North Atlantic passenger unit revenue fell 7.1% year-on-year, while overall passenger unit revenue declined 2.4%. Management attributed some of the pricing pressure to foreign exchange headwinds. Despite these challenges, the company described demand as resilient and expressed cautious optimism for 2026, noting the worst of the dip may have occurred earlier in 2025.
Capital Allocation and Balance Sheet
Available seat kilometres (ASK), a measure of capacity, grew 2.4% year-on-year in Q3, with full-year ASK growth expected around 2.5%. Non-fuel unit costs rose 0.2% in the quarter, and the company maintained its full-year guidance for a roughly 3.0% increase. The total fuel bill is projected at about €7.1 billion, with 76% of fuel exposure hedged for the remainder of 2025.
The fleet expanded with six aircraft deliveries in Q3 and 25 expected for the full year. Capital expenditure is forecast at approximately €3.7 billion. Net leverage stood at 0.8 times and gross leverage at 1.9 times, supported by a strong liquidity position.
IAG declared an interim dividend of €0.048 per share and said a €1.0 billion buyback is nearly complete. The company reaffirmed its full-year outlook, stating, "Our outlook for the full year is unchanged; revenue positively booked for Q4. We are on track to deliver another year of revenue and earnings growth, margin progress and strong shareholder returns." An update on further shareholder returns is scheduled with the full-year results in February 2026.
