The IAG share price has been through a difficult stretch in 2026, with International Consolidated Airlines Group (LSE: IAG) shares dropping around 12% over the three months to mid-May from a year-to-date peak of 464p reached in late February. The pullback has been driven primarily by elevated jet fuel costs linked to Middle East tensions, though more recent trading suggests the worst of the selling pressure may be passing.
IAG is the parent company of British Airways, Iberia, Aer Lingus, Vueling, and LEVEL, making it one of the largest airline holding companies in Europe by passenger volume. The group’s diversified transatlantic and intra-European route network has historically provided some buffer against single-market shocks, a characteristic that analysts point to when arguing the recent share price weakness is overdone relative to fundamentals.
The core driver of the selloff has been jet fuel, which has surged sharply in the context of Middle East conflict escalation. Average prices were reported at around $181 per barrel by early May, a rise of approximately 100% year-on-year. For airlines operating on thin margins, this kind of fuel cost environment quickly erodes profitability and rattles investor confidence. However, IAG’s hedging strategy has insulated it to a meaningful degree. The group is reported to be approximately 70% hedged for the remainder of 2026, significantly reducing near-term earnings exposure compared to less-hedged peers such as Ryanair and easyJet.
First-quarter earnings confirmed this relative resilience, with IAG reporting operating profit up 77% and net profit of €301 million despite the fuel headwinds. Management highlighted the hedging position and signalled capacity to recover a significant portion of incremental fuel costs through pricing adjustments and operational efficiencies. The results prompted a rally in the share price, which bounced from a war-driven low around 335p back to approximately 385-390p by mid-May 2026.
From a valuation perspective, IAG looks inexpensive by conventional metrics. Its price-to-earnings ratio sits around 6.23, well below the FTSE 100 average and significantly below the level analysts typically associate with fair value for a structurally sound airline group. The market capitalisation is approximately £16.96 billion, with a 52-week trading range running from 302p at the low to 464p at the high, illustrating the scale of volatility investors have endured.
The technical picture is cautiously optimistic. The stock has reclaimed both its 50-day and 100-day moving averages following the post-war-news lows, and analysts have identified resistance at 413p as the next meaningful hurdle. A sustained break above that level would open the path toward 450p. Seasonality also works in IAG’s favour, as the summer travel period typically represents the group’s strongest earnings window, and early booking data for transatlantic routes has remained solid.
The longer-term bull case rests on continued leisure and corporate travel demand recovery, disciplined capacity management, and the potential for further fleet modernisation to structurally reduce fuel burn per passenger kilometre. For investors with a six-to-twelve month horizon, the current share price represents a level at which the risk-reward proposition is increasingly compelling.