International Consolidated Airlines Group (IAG) (IAG · LSE)
Five Airlines, Two Hubs, One Loyalty Machine
IAG owns British Airways, Iberia, Aer Lingus, Vueling and LEVEL, and also runs the Avios points scheme that turns credit-card spending into airline cash.
Bull case for International Consolidated Airlines Group (IAG)
Leading share of the busiest long-haul routes
Strong positions between Europe, North America and Latin America underpin the group's most profitable flying.
Avios loyalty business earns cash without aircraft
Selling points to banks and retailers produces high-margin profit that needs very little capital.
Cost and systems overhaul lifts margins
A multi-year transformation programme targets operating margins of 12% to 15% through the cycle.
Bear case for International Consolidated Airlines Group (IAG)
Fuel and conflict can hit profits fast
Oil spikes and closed airspace cut into earnings faster than fares can be raised.
Aircraft and engine delays cap growth
Manufacturer and engine problems ground aircraft and stop planned capacity arriving on time.
Tax ruling threatens the Avios model
UK tax authorities want VAT charged when Avios are issued, which would raise loyalty costs.