International Consolidated Airlines Group (IAG) Deutsche Bank ADR Virtual Investor Conference summary

Strategic overview and business model

• Emphasizes a strong core of hubs, networks, and brands, with a focus on capital-light earnings growth, especially through the loyalty business.

• Targets a 12-15% operating margin and 13-16% return on invested capital in the medium term, underpinned by disciplined investment and a robust financial framework.

• Maintains a net leverage cap of 1.8x as a proxy for investment grade, with current leverage at 0.9x by Q1 2025.

• Business model includes full-service, value, and low-cost carriers, as well as non-flying segments like loyalty, cargo, and MRO.

• Central functions such as treasury, investor relations, and strategy support group operations.

Financial performance and shareholder returns

• Achieved 9% revenue growth and 27% profit growth in 2024, with a 13.8% operating margin and 17.3% return on invested capital.

• Generated nearly EUR 3.6 billion in free cash flow, supporting strong deleveraging.

• Reintroduced dividends in 2024 and proposed a final dividend for the June AGM, with a 20% payout ratio.

• Launched a EUR 350 million share buyback in November 2023, expanding to up to EUR 1 billion over the next 12 months.

• Committed to returning excess cash to shareholders through buybacks and sustainable dividends.

Market positioning and growth strategy

• Operates in major markets: North America (one-third of capacity), Latin America/Caribbean (20%), and Europe (30%).

• Holds 46% market share on Europe-North America routes, with 55% out of London, leveraging slot constraints at Heathrow.

• Focuses on strengthening core markets, especially the North and South Atlantic, and selective long-term growth in India.

• Madrid and Barcelona serve as key hubs for South Atlantic and European growth, with Iberia expanding in Latin America.

• Dual hub strategy in London and Dublin for North Atlantic, Madrid for South Atlantic, providing competitive advantage.