International Consolidated Airlines Group‘s (LSE: IAG) share price has taken flight, climbing 200% over five years. But it hasn’t always been smooth ride for the FTSE 100-listed carrier.

The pandemic hammered the airline industry. IAG, owner of British Airways, Iberia, Aer Lingus and Vueling, was burning through cash as flights were grounded. In 2020, it suffered a €4.4bn operating loss and had to raise €2.75bn from shareholders to strengthen its finances.

After that trauma, the shares looked ridiculously cheap. The price-to-earnings ratio fell to around three or four as investors priced in years of misery. Then travel took off, and so did the IAG share price. Can it keep climbing?

Top FTSE 100 recovery stock

I missed the initial post-Covid surge, but got a second chance when the shares plunged after Donald Trump announced his ‘Liberation Day’ tariffs on 2 April 2025 and the shares plunged. I’m pleased I bought them. Lately though, the pace has slowed. The shares are up just 7.5% over the last year.

The obvious culprit is the war in Iran, which disrupted international routes and sent jet fuel costs soaring. Fortunately, IAG’s around 70% hedged for the remainder of 2026, with around 40% of 2027 covered. It expects to recover about 60% of higher fuel costs through fares, cost savings and other measures.

IAG’s fuel bill could still reach around €8.6bn this year. Rather than expanding available seats and kilometres flown, IAG will keep capacity growth flat.

Inflation and the cost-of-living squeeze are another concern. Holidays are discretionary spending, so consumers can cut back when household finances deteriorate. Higher interest rates may further squeeze disposable incomes.

Airlines carry enormous fixed costs for aircraft, staff, and airport infrastructure. This means a relatively small change in passenger demand or fuel prices can have a disproportionate effect on profits. That’s partly why investors seem reluctant to give airlines sky-high valuations. IAG trades at around seven times earnings, which looks cheap, but perhaps appropriately so.

On the plus side, the board has slashed net debt to €4.69bn, and boasts a massive €12.7bn cash and liquidity cushion. That should help it survive the fuel price spike.

Is the airline good value today?

So what do the experts think? The consensus one-year share price target from 24 analysts is 528p. That suggests potential growth of around 23% from today’s price of 428p. That’s not guaranteed, but I’d be happy to get it.

Deutsche Bank is more bullish, with a 645p target. It expects strong 2026 operating profits and believes margins can remain within IAG’s 12%-15% medium-term range.

Citigroup rates IAG a Buy with a 600p target, while RBC Capital Markets has an Outperform rating and 500p target.

What about me? I’m thrilled with my IAG shares, but I’m cautious. Higher inflation, expensive fuel and squeezed consumers could slow progress in the short term. I think IAG’s worth considering, but I’ll also be looking elsewhere on the FTSE 100 for the next exciting growth opportunity.

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Harvey Jones owns shares in IAG.