IAG (BA and Iberia): revenue on the rise, but high fuel costs are holding back profits
The holding company has confirmed its 2026 targets, with a 10 per cent increase in the dividend. Demand remains strong in the fourth quarter as well
Travel demand remains strong, particularly on long-haul routes, but rising fuel prices and geopolitical tensions continue to put pressure on the profitability of the aviation sector. This is the picture that emerges from the results for the first nine months of 2026 of International Airlines Group (IAG), the group comprising British Airways, Iberia, Aer Lingus, Vueling and LEVEL.
The third quarter, traditionally one of the most important periods in terms of seasonality for the sector, highlighted the pressure on costs. Between July and September, turnover rose by 4.5 per cent to €9.74 billion, but operating profit before exceptional items fell by 15.9 per cent to €1.73 billion, below analysts’ expectations. The operating margin stood at 17.7 per cent, compared with 22 per cent in the third quarter of 2025, and net profit fell by 12.2 per cent to €1.231 billion.
The main factor affecting the accounts is the trend in jet fuel prices. In the first nine months, expenditure on fuel and emissions charges reached €6.4 billion, an increase of 18.6 per cent, equivalent to approximately one billion more year-on-year. However, the hedging policy has made it possible to partially mitigate the effects of volatility, generating gains of €1.25 billion in the first nine months.
On the commercial front, the most significant performance came from the North Atlantic market, which recorded an 11 per cent increase in unit revenue in the third quarter, against a broadly stable capacity. All the group’s airlines reported growth in unit revenue on these routes.
British Airways increased its capacity by 2.2 per cent and its unit revenue by 12 per cent, whilst Iberia benefited from the expansion of routes operated with the new Airbus A321XLR aircraft, increasing capacity on the North Atlantic by 11.5 per cent and unit revenue by 4.2 per cent. Aer Lingus also posted a positive performance, with a 0.7 per cent increase in unit revenue.
