British Airways and Iberia parent IAG has set itself a medium-term profits target of delivering an operating margin of 12-15%.

The target is in line with the group’s pre-pandemic profitability. IAG delivered an operating margin, prior to exceptional items, of almost 13% in 2019. Likewise, IAG’s medium-haul aim of delivering a return on investment capital in the range of 13-16% is consistent with the level achieved in its last financial year before the pandemic.

British Airways, Iberia, Aer Lingus, Vueling, Level

Source: Postmodern Studio/

IAG, which also includes Spanish low-cost carrier Vueling, Irish carrier Aer Lingus and low-cost unit Level, outlined the target at a Capital Markets day today. 

To support the profit goals, IAG identifies four near-term strategic priorities. These include “transforming” its businesses to reach their full potential, “leveraging” its Spanish platforms to deliver €1.5 billion in operating profit, investing in BA to “drive higher customer satisfaction, profits and margins” and growing its loyalty business.

IAG chief executive Luis Gallego says: “We are focused on extending our core leadership positions in the North Atlantic and South Atlantic through developing our hubs, while enabling IAG Loyalty to reach its full potential within the group.

”Our transformation and investment plans will drive a step change across our businesses, delivering efficiencies and a market-leading customer experience. Executing our strategy will enable us to deliver sustainable growth and returns for our shareholders.”

IAG expects compound annual capacity growth, as measured in available seat kilometres (ASKs), of between 4-5% over the next three years. That will see its ASK capacity pass pre-pandemic levels in 2024, though the group’s fleet will not overtake the 598 aircraft it flew in 2019 until 2025. 

The group expects its fleet to reach 611 aircraft – comprising 384 narrowbodies and 227 widebodies – by 2026. That is based on “committed deliveries” of 94 aircraft between 2024-26, comprising 41 A320neos, 14 A321XLRs, 18 Boeing 737 Max jets, six 777-9s, 11 787s and four A350s.

IAG also today committed to restoring dividends, suspended since the pandemic, once its balance sheet restoration and investment plans “are secure”.