JP Morgan has put International Consolidated Airlines Group SA (LSE:IAG), the owner of British Airways and Iberia, on its positive catalyst watch list, tipping it for further outperformance in the second half of the year.
By contrast, Lufthansa is on the bank’s negative catalyst roll call, with US bank expecting the gap between the two to widen.
It highlights three reasons why IAG stands out. First is capacity. IAG’s core transatlantic routes are seeing the tightest supply, which usually helps to keep ticket prices firm.
Second is volume. JP Morgan says passenger numbers to and from the US remain positive for IAG’s main markets but are currently negative for Lufthansa and Air France-KLM.
The third driver is premium seats. Demand for business and first-class travel remains healthy, and JP Morgan points out that IAG has the highest proportion of premium seats on the transatlantic, which is the group’s most profitable region.
Outside of the US, the trends are more mixed. IAG is benefitting from strong demand for flights to Latin America, while Lufthansa and Air France-KLM could see some improvement in Asia-Pacific as comparisons with last year become easier. All three face some uncertainty from disruption in the Middle East.
JP Morgan has raised its 2025 earnings forecast for IAG by 3%, citing lower fuel costs and slightly better revenue per seat, and now sits about 6% above consensus.
Its price target for the shares is unchanged at €5.50 for December 2026, which implies around 30% upside from current levels.
The bank remains “overweight” on IAG, “neutral” on Air France-KLM, and “underweight” on Lufthansa, expecting IAG’s strong showing to continue.
The shares were up 0.6% at 371.5p.