IAG — International Consolidated Airlines Group S.A.

IAG — International Consolidated Airlines Group S.A. · deep-value analysis (REFRESH)

Date: 2026-09-13 · Exchange: LSE (primary) / BME Madrid (secondary) · Yahoo symbol: IAG.L Price: … GBp · Shares: 4,370.02 mil. · Market cap: … = … (FX GBP/EUR 1.1651) Reporting currency: EUR · Price currency: GBp — DIFFERENT; all returns below are calculated after conversion. Reference report: rapoarte/deep/2026-08-22-deep-IAG.md (21 days) · Delta package: delta-IAG-20260912.md

This redo’s regime — what I inherit and what I re-derived

The mechanical triage called for a REFRESH on two grounds: “1 unclassifiable 6-K filing” and “1 unverifiable falsifier.” Both proved to be artifacts, not new facts, and this is this redo’s first conclusion:

1. The 6-K filing of 09/09/2026 (accession 0001062993-26-004869) is not IAG’s. It belongs to IAMGOLD Corporation (CIK 1203464, a Canadian gold miner, NYSE, USD reporting), the company the “IAG” ticker collides with on EDGAR and Yahoo. The collision was identified and resolved on 08/22/2026 (the wrong data pack is kept as data-pack-IAG-20260822.WRONG-IAMGOLD.md.bak, and the IAG → IAG.L alias was permanently set in _BVB_ALIASES), but the delta triage still queries EDGAR by symbol, so it re-triggers on every IAMGOLD filing. The SEC-Filings/IAG/ folder doesn’t exist and shouldn’t: IAG isn’t SEC-registered, has no CIK and no companyfacts. Primary sources remain the CNMV/RNS filings on iairgroup.com. This redo contains no information from the 6-K filing, since the filing belongs to another company.

2. The fcf_yield falsifier is structurally dead, not temporarily. The triage’s stated reason (“I need 1 more consecutive quarters, 1 is missing”) hides a permanent problem: yfinance doesn’t publish quarterly cash flow statements for IAG.L at all — the new data pack confirms it verbatim (“Cash flow — quarterly: data unavailable”). IAG doesn’t report cash flows quarterly (it publishes a balance sheet and cash flow only semi-annually and annually), so the metric will never populate on a quarterly cadence. I re-derived it manually in the valuation chapter and propose replacing it with a verifiable falsifier from the vocabulary that DOES populate at IAG.L — see “Triangulated valuation,” section “The falsifier to replace.”

What I explicitly inherit, without re-derivation (no new financial report has published between 08/22/2026 and today; the next is Q3 on November 6, 2026):

• the FY2025 FCF bridge and the historical 2022–2025 series (CFO, capex, lease principal) — checked line by line in the FY2025 release, p. 29, and the H1 2026 interim report, p. 23;
• the H1 2026 segment structure and the moat analysis;
• the O’Glove analysis on receivables, inventories, debt, discretionary expenses and accruals over 2023–2025 + H1 2026;
• the six accounting red flags identified in August;
• the three pre-mortem scenarios.

What I re-derived, because a fact moved or because I could verify something that was previously open:

• Completion of the second buyback tranche (09/10/2026) — the only new material corporate fact, and it changes one note in the Thorndike grid and one GBL criterion;
• the lease book at 06/30/2026 versus 12/31/2025 — a new check of the reference report’s bull-scenario key assumption, from the new data pack;
• all five valuation models, at today’s price, share count and exchange rate;
• Monte Carlo over 20,000 scenarios, rerun;
• the complete GBL scorecard, with one Buffett criterion changed on new evidence;
• FCF yields, recalculated on today’s market cap and externally checked against what the market publishes;
• the currency bug in the tracker’s own disc_gn — identified precisely, with the figure.

The price move (… → … GBp, …) is context, not a reason. I build nothing on it; its effect is strictly arithmetic on the margin of safety and is reported as such.

Executive summary

The thesis, unchanged in substance. IAG remains Europe’s most profitable network airline group — … operating margin in 2025 (an absolute record), 14.4% over the trailing twelve months, net debt … (0.63× TTM EBITDA), stable BBB/Baa2/BBB ratings at all three agencies, liquidity …. It trades at 7.63× trailing profit, 6.25× forward profit and 3.48× TTM EBITDA (EV … / EBITDA …). On paper, an excellent business at a liquidation price. The thesis’s problem isn’t operational quality, but that real cash flow to the shareholder is ~75% smaller than the figure the company publishes and brokers cite, and at the correct flow the discount disappears.

The central finding, now with an additional check. IAG itself defines “Free cash flow” as CFO − capex and reported … for 2025. But the group has … of lease liabilities (12/31/2025) — nearly half its gross debt — and the repayment of lease principal, … in 2025, is reported in FINANCING, not capex. CFO adds back right-of-use asset depreciation, and cash capex contains no aircraft that entered via lease: CFO − capex counts the revenue from operating a fleet whose acquisition cost was never subtracted. FCFE 2025 = … − … − … = …, not … Divergence ….

The new check the August report didn’t have: the lease book doesn’t run off. At 12/31/2025 lease liabilities were …; at 06/30/2026 they’re … — a net decline of only …, even though … of principal was repaid in the same half-year. New lease additions (plus interest accretion, minus the FX effect on the dollar-denominated portion) replaced almost all of the repayment. In other words, the …–1.4 bn/year outflow isn’t a runoff that ends, it’s a recurring fleet cost the company’s definition never sees. This hits directly the most generous assumption in the reference report’s bull scenario (“lease repayment normalizes toward the level of new additions, … in 2025”) — at H1 2026’s pace, annualized additions are on the order of …–1.3 bn, not …

The new corporate fact. On 09/10/2026 IAG completed the second … tranche of the … return announced in February 2026, buying under it 97,747,488 shares (~2.12% of issued capital), held in treasury pending cancellation approved at the June 18, 2026 AGM. Implied average price: …/share ≈ 439 GBp. Today’s price is … GBp. The second tranche is underwater by 4.4% and bought above the intrinsic value from my own base DCF (424.2 GBp). By comparison, the 2025 program bought 312.0 mil. shares at … — 34% cheaper, and is up 28.0% today. This is the first hard evidence that IAG’s buyback is calendar-based, not contrarian, and it’s the only thing in this redo that changes a score.

Estimated value. Five triangulated models give a range from … to …, with a median at …. The FCFE DCF at unchanged central assumptions (OE …, g1 3%, r 11%, gt 1.5%, net debt 0) gives 424.2 GBp against … GBp — margin of safety …. Monte Carlo over 20,000 scenarios: median …, probability of undervaluation …%, probability of a margin above 30% …%. The 4.2% price decline moved medians by 1.3 percentage points and P(undervalued) by 1.6 points. This isn’t a thesis change, it’s arithmetic.

The verdict. GBL recalculated: Graham 4.5 · Buffett 5.5 (from 6.0) · Lynch 3.5 → SP = 4.5 + … + 10.5 = 26.0/60 = …% → 🔴 SPECULATIVE. A coincidence worth noting: the tracker’s prior score (re-scored 09/06/2026) is also …%, but with a different composition (Graham 3.5 · Buffett 6.0 · Lynch 3.5). The figure is identical, the reasons aren’t — exactly the accidental-convergence pattern the August report already documented once against the July entry.

This isn’t an “avoid” thesis. It’s a “fair price for a good business in a bad industry” thesis, and 21 days haven’t changed it. The threshold at which it would become interesting remains ~330 GBp (the 52-week low: 332.7 GBp), where the base DCF would give ~… and P(undervalued) would cross 70%.