IAG.L WACC - Weighted Average Cost of Capital

The WACC of International Consolidated Airlines Group SA (IAG.L) is 8.3%.

The Cost of Equity of International Consolidated Airlines Group SA (IAG.L) is 12.05%.

The Cost of Debt of International Consolidated Airlines Group SA (IAG.L) is 4.85%.

	Range	Selected
Cost of equity	10.40% - 13.70%	12.05%
Tax rate	12.40% - 14.40%	13.40%
Cost of debt	4.50% - 5.20%	4.85%
WACC	7.3% - 9.2%	8.3%

WACC

IAG.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.07	1.24

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.40%	13.70%

Tax rate	12.40%	14.40%
Debt/Equity ratio	0.93	0.93
Cost of debt	4.50%	5.20%

After-tax WACC	7.3%	9.2%


Selected WACC	8.3%

IAG.L's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for IAG.L:

cost_of_equity (12.05%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.07) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.