International Consolidated Airlines Group (LSE: IAG) shares have seen a notable decline, dropping from a post-pandemic peak of 438p on January 7, 2026, to around 410p as of January 20. This decline translates to a year-to-date loss of 0.8%, prompting investors to reconsider the factors influencing the stock’s performance.
Understanding the decline in IAG’s share price reveals several underlying pressures. A primary factor is the increase in oil prices, which have risen due to geopolitical tensions, particularly involving actions by the United States related to Venezuela and Iran. While analysts at Bernstein continue to express confidence in IAG’s strong position in the North Atlantic market, the rising oil costs have unsettled investors.
Weak performance in the North American and European markets during the third quarter of 2025 has compounded these concerns. Passenger revenue per available seat kilometer fell by 7.1% in North America and 6% in Europe, contributing to a negative sentiment surrounding the airline’s stock.
Future Outlook and Potential for Recovery
Looking ahead, there could be potential for a rebound in IAG shares, contingent on several factors. The airline’s performance in 2025 was buoyed by a significant share buyback program totaling €1 billion and impressive profit growth. Expectations are high for the upcoming earnings report scheduled for February 27, where analysts anticipate a new buyback announcement, potentially up to €2 billion.
If oil prices stabilize or decrease, this would further enhance the stock’s recovery potential. Analysts maintain a generally optimistic outlook, with an average price target of 492.77p, indicating that growth is possible from the current price. Upgrades from firms such as Morgan Stanley, which has given IAG an Overweight rating, reflect confidence in the airline’s financial health and the sustained demand for air travel.
Despite these positive indicators, IAG faces significant risks. Economic downturns in key markets, including the UK, Eurozone, and the United States, may dampen travel demand. While the airline’s financials remain robust, the extraordinary gains realized during the post-pandemic recovery may be challenging to replicate in 2026.
Technical Analysis of IAG’s Stock Performance
The current IAG share price is testing a crucial support level near the psychological mark of 400p. The stock’s Relative Strength Index (RSI) stands at approximately 48, indicating that it is neither overbought nor oversold, but exhibits a slightly negative sentiment in the short term. Should the share price dip below the 50-day Simple Moving Average (SMA) level of 402.28p, it could potentially fall to around 390p, a level where it had previously consolidated in late 2025.
Further declines could see the stock drop to the 380p level if downward momentum intensifies. Conversely, key resistance is identified at the 10-day SMA of 418.36p, with a significant barrier at the 435p level.
In summary, while the IAG share price faces immediate pressure from rising oil prices and sluggish market performance, analysts remain hopeful for a recovery, particularly with a substantial earnings announcement on the horizon. Investors will be closely monitoring upcoming developments to gauge the airline’s trajectory in the coming months.
