JPMorgan Favors IAG Over Lufthansa Amid Diverging Transatlantic Trends

JPMorgan has added International Consolidated Airlines Group (IAG) to its Positive Catalyst Watch and placed Lufthansa (ETR:LHAG) on its Negative Catalyst Watch for the second half of 2025, citing diverging trends in Transatlantic travel demand and market positioning.

The investment bank highlighted IAG’s pricing strength, particularly on U.S. routes, and forecast potential consensus earnings upgrades. IAG, which owns British Airways, benefits from constrained capacity on its core Transatlantic routes, positive volume trends in and out of the U.S., and strong premium class demand. JPMorgan noted that IAG has the highest premium seat penetration among peers, positioning it well to capture high-margin travel.

In contrast, Lufthansa is facing weaker outlooks, particularly on U.S. routes where volume growth has lagged. JPMorgan sees this trend as a headwind for both Lufthansa and Air France-KLM (EPA:AIRF), while IAG benefits. Although pricing trends outside the Transatlantic are seen as generally offsetting, IAG continues to gain from robust Latin American demand, while Lufthansa and Air France-KLM may receive modest support from Asia-Pacific markets due to favorable year-over-year comparisons.

Despite geopolitical risks in the Middle East affecting all three carriers, JPMorgan raised IAG’s 2025 EBIT forecast by 3% on lower fuel costs and improved unit revenues, placing it about 6% above consensus. In contrast, Lufthansa’s 2025 EBIT estimate was trimmed by 3%, now sitting 9% below consensus.

Although shares of both IAG and Lufthansa have risen about 20% year-to-date, JPMorgan believes performance may diverge going forward. IAG remains on the firm’s Analyst Focus List with 30% upside potential to its unchanged €5.50 December 2026 price target. JPMorgan maintains an Overweight rating on IAG, Neutral on Air France-KLM, and Underweight on Lufthansa.