Airlines

IAG increases profits by 77% despite Middle East crisis

The airline (British Airways and Iberia) has little exposure to the crisis area. Expected drop in annual profits due to fuel costs

by Mara Monti

8 May 2026

2' min read

Translated by AI

Versione italiana

2' min read

Translated by AI

Versione italiana

A quarter of strong growth for IAG, the holding company that controls British Airways, Iberia, Aer Lingus and Vueling, helped by its limited exposure to the Middle East. In contrast to the rest of the sector, the group reported a 77% increase in operating profit in the first three months of the year to EUR 351 million, exceeding analysts' forecasts.

Net profit grew by 71% to EUR 301 million, while turnover increased by 1.9% to EUR 7.18 billion. Revenues of the passenger division rose by 3.8% to EUR 6.23 billion.

In spite of the positive results, IAG expects a decline in profits in the current year, but without giving precise indications. The increase in fuel costs, estimated to rise by EUR 2 billion to EUR 9 billion, is the main factor. Around 70 per cent of the projected expenditure for the remainder of 2026 is, however, covered by hedging contracts.

The group had previously indicated the need to increase tariffs to compensate for higher fuel prices. Market fears about a possible deterioration in results pushed the share price on the stock exchange to lose 5%.

The company did not release detailed annual profit forecasts. However, IAG made it clear that it does not anticipate any criticality in fuel supply, while maintaining contact with governments and the European Union should the situation worsen.

Lufthansa and Air France-KLM also ended the quarter with a loss, albeit with better-than-expected results. Both also expect a sharp increase in fuel expenditure in 2026: by EUR 1.7 billion and USD 2.4 billion respectively.

'In the long term we expect the current situation to strengthen IAG's leadership position and its ability to generate profits in a more consolidated and sustainable aviation market,' the group said in a note.

The company explained that, prior to the start of the conflict, about 3% of capacity was exposed to the Gulf region, mainly through British Airways, with smaller shares operated by Iberia and Vueling. The affected network included the United Arab Emirates, Qatar, Saudi Arabia, Bahrain, Israel, Jordan and Cyprus.

Most of these routes have been reorganised. The group increased capacity to destinations traditionally served by Gulf carriers, such as Bangkok, Singapore and Malé. British Airways also introduced additional flights on routes with greater direct demand, such as India and Nairobi to the US, as well as strengthening connections to alternative winter destinations such as the Caribbean and Sri Lanka. In contrast, Iberia and Vueling reallocated capacity previously allocated to Tel Aviv on Spanish domestic routes.

As a result, capacity growth will be lower than the 3% forecast for 2026: the group estimates an increase of 1% in Q2 and 2% in Q3. However, travel demand remains strong in key markets, with bookings for the second quarter already at 80% of available capacity.