IAG.L WACC - Weighted Average Cost of Capital

The WACC of International Consolidated Airlines Group SA (IAG.L) is 8.1%.

The Cost of Equity of International Consolidated Airlines Group SA (IAG.L) is 12.20%.

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

	Range	Selected
Cost of equity	10.40% - 14.00%	12.20%
Tax rate	12.40% - 14.40%	13.40%
Cost of debt	4.50% - 5.20%	4.85%
WACC	7.1% - 9.1%	8.1%

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	1.06	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.40%	14.00%

Tax rate	12.40%	14.40%
Debt/Equity ratio	1.07	1.07
Cost of debt	4.50%	5.20%

After-tax WACC	7.1%	9.1%


Selected WACC	8.1%

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 (12.20%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.06) + 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.