S&P Upgrades IAG's Rating to 'BBB' Thanks to Strong Cash Flow

S&P Global Ratings has upgraded International Consolidated Airlines Group S.A. (IAG)’s long-term issuer credit rating from 'BBB-' to 'BBB' due to strong cash flows and decreasing leverage ratios. The rating agency also improved the outlook on the group's unsecured debt. S&P’s stable outlook for IAG is based on the expectation that the funds from operations (FFO) to debt ratio will remain significantly above 45% over the next two years.

In 2024, IAG’s adjusted EBITDA is projected to reach €6.7 billion, exceeding S&P's previous estimate by approximately €1 billion. This achievement is attributed to delayed capital expenditures and the use of excess cash for debt repayments, enhancing the group’s financial flexibility. IAG is expected to maintain record earnings in 2025, generating positive free operating cash flow (FOCF) despite increased capital expenditures.