As I type, British Airways owner International Consolidated Airlines (LSE: IAG) looks set to be one of the best-performing FTSE 100 stocks in 2024.

What’s gone so right? And just how much money would an investor have made if they’d bought £10,000 of IAG shares as soon as markets opened in January?

IAG soars above competitors

Let’s address that first question. Over the year, IAG’s benefitted from lower fuel costs and higher demand, with the latter allowing it to increase ticket prices. An abandoned takeover of Spain’s Air Europa (due to regulatory hurdles) was also greeted with sighs of relief from investors.

But things really stepped up a gear when Q3 numbers were released in November. Back then, the company announced a 15.4% rise in operating profit, thanks in part to more people flying between London and the US.

Not only did this beat market expectations, it also smashed the performance of rivals such as Air France-KLM and Lufthansa over the summer. The former was impacted by tourists wanting to avoid the Paris Olympics. Meanwhile, Lufthansa lost ground in Asia to Chinese competitors. Both of IAG’s competitors also faced higher costs.

Throw in a €350m share buyback and recent share price performance — up 94% year-to-date — makes quite a bit of sense.

Huge gains

Returning to the second question, a £10,000 investment at the beginning of 2025 would now be worth £19,400. Actually, it’s very slightly more than that if we take September’s interim dividend — IAG’s first distribution in just under four years — into account. In terms of performance, this puts the airline operator on par with top-tier superstock Rolls-Royce (+96%).

Of course, it goes without saying that IAG’s gains absolutely smash the market return too. Over the same period, the FTSE 100 index has climbed a little less than 7%.

This serves as yet more evidence of just how lucrative stock picking can be.

Can this continue?

The question is whether IAG shares will fly even higher. Based on valuation alone, I’m tempted to say they can. A forward price-to-earnings (P/E) ratio of just 6 still looks very reasonable.

CEO Luis Gallego seems bullish too. He said in November that demand across the company’s airlines “remains strong” and that IAG expected “a good final quarter financially“. As it stands, analysts are predicting 2024 operating profit to hit €3.7bn.

Full-year numbers for 2024 are due to land on 26 February.

Buyer beware

But an investment in IAG’s certainly not devoid of risk. It goes without saying that the company has no say on the price of fuel. Adverse weather, higher wages, geopolitical tensions and armed conflicts can also impact operations, as can delays in the delivery of parts.

In October for example, British Airways was forced to cancel hundreds of long-haul flights due to aircraft shortages. Rather ironically, this was traced back to not enough engines being supplied by… Rolls Royce.

Despite strengthening in recent years, IAG’s balance sheet still looks significantly weaker than it did before the pandemic. That’s not ideal if inflation keeps bouncing.

These concerns aside, I’m inclined to think recent momentum will continue, especially if investment in the “structurally growing” Latin America market pays off.

Consequently, any investors with cash on the sidelines may want to consider getting involved.