International Consolidated Airlines Group (LSE: IAG) shares flew in 2024, roughly doubling in value before hitting turbulence when Donald Trump announced his tariffs in April. Nearly the whole stock market dipped, but IAG as it’s known was hit harder than most, due to its exposure to transatlantic travel.

I jumped on the stock the moment Trump paused his tariffs for 90 days. The market bounced, and IAG bounced harder. Within weeks, I was sitting on a 30% gain. But that didn’t last. As trouble flares in the Middle East, the shares have plunged, wiping out much of my quickfire early gain.

Approach with caution

The sell-off was inevitable. Airline stocks seem to be a rough guide to global sentiment. Few sectors suffered more during the pandemic, when fleets were grounded but fixed costs rolled on. But when confidence is up, they lead the charge. At least, that’s how it’s been lately.

And that brings me to the one word investors need to bear in mind when approaching these shares today: volatility. These days, the ups and downs are baked in, so buckle up.

I think this helps explain why International Consolidated Airlines Group has traded on a dirt cheap price-to-earnings (P/E) ratio lately. Its P/E was still as low as three or four in early 2024, despite signs that travel demand was finally recovering from the Covid hangover.

Even after rising 83% over 12 months, the IAG share price still only trades at 6.6 times earnings. That looks tempting but I wouldn’t assume that one day it’ll jump to a fair value of 15 times.

Share buybacks roll

The financials look good though. The group posted a 27% jump in operating profit before exceptional items in 2024, hitting €4.44bn. Revenue climbed 9%, while free cash flow reached €3.56bn, even after investing €2.82bn back into the business. The board launched a €350m share buyback and aims to return up to €1bn more to shareholders over the next year.

But this stock’s unlikely to stay steady for long. It was dizzying during the tariff turmoil, and it’s dizzying again as oil bounces around the $77 a barrel mark. It was just $60 at the start of June. If oil surges past $100, I’ll probably be in the red. Any threats to civilian flights would also play badly.

Even before the Iran conflict blew up, Deutsche Bank had cut its earnings forecasts by 13% for 2025 and 10% for 2026.

Use the volatility

I’m glad I took my chance when the shares dipped, but having monitored performance beforehand, I was ready for short-term volatility. And I’m happy to look past it, towards the long-term. I plan to hold for years.

International Consolidated Airlines Group still has €7.5bn of net debt. It’s been whittling this away but if inflation and interest rates surge again, its borrowings could be more of a burden. The group also has to invest heavily upgrading fleets and building the business.

This isn’t a stock to chase once it’s already flying, in my view. Pay too much and investors risk being exposed to the next shock. But I think the shares are still worth considering today. Just don’t forget the V-word.