8th May 2026 08:52
(Alliance News) - International Consolidated Airlines Group SA on Friday said that soaring fuel costs will mean lower than expected full-year profit as it deals with the fall-out of the Middle East crisis.
The Madrid-based owner of British Airways, Iberia, Aer Lingus and Vueling said operating profit jumped 77% to EUR351 million in the three months to March from EUR198 million the year prior, beating Bloomberg-cited consensus of EUR246 million.
Revenue edged up 1.9% to EUR7.18 billion from EUR7.04 billion with basic earnings per share of 6.5 euro cents, up 76% on-year from 3.7 cents.
Sales and revenue growth reflected continued strong demand, IAG Chief Executive Luis Gallego said.
But the CEO warned the impact of higher fuel prices caused by the Middle East crisis will "inevitably lead to lower profit this year than we originally anticipated."
The CEO gave no exact guidance and JPMorgan said current full-year consensus for operating profit is EUR4.7 billion, which would be down from EUR5.02 billion posted in 2025.
"We are actively managing the uncertainty created by the fuel price increase and its impact," and "currently see no issues with fuel availability," the CEO added.
IAG now expects full-year fuel costs of EUR9 billion, including hedging positions, which would be 27% higher than EUR7.08 billion in 2025, and above the EUR7.0 to EUR7.4 billion range IAG forecast in February.
Shares in the airline fell 4.1% to 380.05 pence each in London on Friday, with the wider FTSE 100 down 0.8%.
Around 3% of IAG's capacity is exposed to the Middle East with a large part of this being redeployed.
For the full-year, IAG no longer expects the 3% group-wide capacity increase it forecast in February. It projects capacity to increase by around 1% in the second quarter and by around 2% in the third.
In addition, IAG lowered said full-year free cash flow will be less than the EUR3 billion guided in February. Capex is now expected to be around EUR3.5 billion, lowered from EUR3.6 billion previously.
For the quarter, net debt fell to EUR4.18 billion from EUR5.95 billion.
Available seat kilometres were flat at 79.3 million, with passenger revenue per ASK up 3.5$ to 7.85 cents from 7.58 cents.
IAG said it has seen strong demand across most markets, particularly in Premium cabins and in both the North and South transatlantic markets, which together represent around half of its capacity.
Business travel in particular continues to deliver good revenue growth, it said, although there has been some long-haul yield pressure at Aer Lingus.
The short-haul European market remains "competitive", it added.
By Jeremy Cutler, Alliance News reporter
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