DAVY VIEW

The outlook for IAG remains confident, with a smaller increase in ex-fuel costs and resilient free cashflow generation. The group continues to see robust demand for air travel and brands across its core markets, highlighting the strength of its portfolio. The Q2 performance, at first glance, looks very strong with operating profit of €1680m (consensus €1430m, Davy €1443m). Leverage at 0.7x gives a lot of flexibility in capital allocation. There will be upward pressure on consensus estimates this morning (FY consensus €4645m, Davy €4645m).