International Airlines Group (IAG.L)

EUR/ASK Reporting Convention

International Airlines Group (IAG) owns British Airways (BA), Iberia, Vueling, Aer Lingus and LEVEL. It reports in euro cents per available seat kilometre (ASK: one seat flown one kilometre), where US carriers use dollar cents per seat mile. Two of its numbers are easy to misread: the obvious unit spread understates the real one, and its low leverage ratio already counts aircraft leases.

Passenger revenue per ASK (PRASK) was 8.24 €c and non-fuel cost per ASK (CASK ex-fuel) was 6.01 €c, up 2.8% year on year. Subtracting one from the other gives 2.23 €c, but the scopes differ: CASK ex-fuel covers the whole group, cargo and loyalty included, while PRASK is passenger revenue only. The matching revenue line is total revenue per ASK, about 9.45 €c (€33,213 million ÷ 351,435 million ASK), for a like-for-like ex-fuel spread of about 3.4 €c. Like US ex-fuel CASM, CASK ex-fuel includes depreciation, including on leased aircraft.

Load factor, the share of seats filled by paying passengers, was 85.6%. The shares list in London in sterling, so equity value converts at a different rate from the euro operating figures: market capitalisation of about £18.1 billion (~$24.2 billion) on 10 June 2026 uses GBP/USD 1.3382 and GBP/EUR 1.1597 on that date.

Converting to US units takes the factor 1 mile = 1.609344 km: derived PRASM of about 13.26 €c/ASM (8.24 × 1.609344) and CASM ex-fuel of about 9.67 €c/ASM. The RASM and CASM guide labels both as derived. Set beside a US carrier's total revenue per ASM (TRASM), they still need a currency conversion and a revenue-scope match.

Transatlantic Network Group

The group pairs long-haul transatlantic premium traffic with European short-haul feed. Its capacity grew 2.4%, against 6.1% at United and 9.2% at Ryanair. The load factor guide sets its load factor beside IATA's Europe average for FY2025 of 84.8%.

PRASK reflects the long-haul yield mix of a group that reports one consolidated set of unit figures. Ranking it against Delta's TRASM of 21.26¢/ASM or United's 17.88¢/ASM on the raw numbers tells you nothing until currency and seat-mile conversions are done.

IFRS 16 Leverage vs US EBITDAR

IAG's 0.8× net leverage already counts its leases. It reports under IFRS 16, the standard that puts leases on the balance sheet: its borrowings include €6,995 million of lease liabilities, and lease costs sit below EBITDA as depreciation and interest. So the ratio, net debt of €5,948 million over EBITDA before exceptional items of €7,652 million, is lease-inclusive. In concept it is close to the adjusted-debt-to-EBITDAR ratios US carriers publish (EBITDAR: EBITDA before aircraft rent), though the definitions differ.

Gross leverage was 1.9× (gross debt of €14,267 million over the same EBITDA). IAG targets net leverage below 1.8× over the medium term and aims to hold gross leverage at 1.5–2.0× by owning more aircraft free of secured debt; 16 of its 25 FY2025 deliveries came that way.

The EBITDAR guide explains how the US versions differ: US carriers add back only the fixed part of operating lease expense, and some put pensions in adjusted debt. Like-for-like pairs, each labelled with its definition, are IAG's 1.9× gross beside Delta's 2.4× gross, and IAG's 0.8× net beside United's 2.2× net.

FCF and Balance Sheet

IAG's free cash flow was €3,146 million in FY2025 on its alternative performance measure (APM: a company-defined figure outside IFRS): operating cash flow of €6,588 million less capex of €3,442 million, the same construction as Ryanair's computed €1,863.2 million. That covered €471 million of dividends and €1,243 million of share buybacks, and net debt fell by €1,569 million.

Under IFRS 16, lease principal repayments (€1,344 million in 2025) sit in financing cash flow, so this FCF does not deduct them. US carriers pay operating lease rent inside operating cash flow, so their FCF has it taken out already.

What to Watch in the Financials

The ex-fuel spread narrowed in FY2025, because CASK ex-fuel rose while PRASK was flat at 8.24 €c in both years. Unit revenue has to grow at least as fast as non-fuel unit cost to hold it.

Transatlantic demand swings revenue. BA's long-haul premium traffic drives group PRASK, and North Atlantic capacity and corporate travel move it before short-haul costs respond.

Gross leverage of 1.9× sits just under the top of the 1.5–2.0× range IAG aims for. Gross debt moves with how each year's deliveries are financed, whatever happens to earnings.

Valuation Framework

For an IFRS 16 filer, the matching pair is EV/EBITDA on its own figures with lease liabilities in net debt, because EBITDA is already struck before lease costs. US carriers are screened on EV/EBITDAR, with a band of about 4–7× and a model anchor of 5.5×, so an IFRS-based ratio belongs in its own labelled table.

Key Risks

Transatlantic premium revenue is more cyclical than Ryanair's short-haul base, and FY2025 PRASK includes long-haul pricing that may not hold at the same level.

BA, Iberia, Vueling and Aer Lingus have different cost structures inside one consolidated PRASK and CASK line. Segment disclosure is where you find which airline drives group margin.

Peer Context

The Airlines Sector Primer set of six pairs Ryanair, with a 94% booked load factor and net cash of €1.30 billion at 31 March 2025, with US network carriers such as Delta. IAG is the European network group, carrying short-haul feed and transatlantic premium in one consolidated line.