LONDON, March 12, 2026, 15:49 GMT
- IAG shares were down 3.23% at 362 pence in delayed London trade on Thursday. 1
- The group says it is well hedged for the near term and has no immediate plan to raise fares. 2
- Fresh signs of strain are showing up across travel, with On the Beach pulling guidance after Mediterranean bookings slowed. 3
International Consolidated Airlines Group SA shares fell 3.23% to 362 pence on Thursday as oil climbed back above $100 a barrel and investors braced for a renewed hit to airline fuel bills. The selloff came even after British Airways owner IAG said earlier this week that it was protected in the near term by fuel hedges. 1
The move matters because IAG had gone into March as one of Europe’s stronger full-service airline stories. Less than two weeks ago it posted a better-than-expected 2025 operating profit of 5.02 billion euros and laid out 1.5 billion euros of shareholder returns, including a 500 million euro buyback due by end-May. 4
Now the market is asking whether that story can survive another energy shock. IAG said on March 10 it had no immediate plans to raise fares and was well hedged for the near term. Hedging means using contracts to lock in part of a future fuel bill, and the group’s policy allows cover of up to 75% of expected near-term fuel needs on a three-year rolling basis. 2
That stance leaves IAG looking steadier than some rivals, at least for now. Air France-KLM said on Thursday it would raise long-haul ticket prices, while SAS said earlier this week that it had made a temporary price adjustment. Spot Northwest European jet fuel stood at $1,536 a metric ton on Thursday, close to Monday’s intraday peak of $1,633. 5
But hedges are not a clean shield. Jet fuel prices have doubled since the war with Iran began, far outpacing the roughly one-third rise in crude because refiners have charged a much bigger premium over raw oil. “The longer the disruption goes on, the greater the impact on energy prices and in turn global inflation,” AJ Bell analyst Danni Hewson said. 6
The operating strain is already showing up on the network. British Airways has brought forward the end of its winter-season flights to Abu Dhabi because of “continuing uncertainty”. On Thursday, package holiday group On the Beach suspended its annual profit forecast after bookings to Turkey, Greece, Cyprus and Egypt weakened sharply, an early sign that leisure demand is softening beyond the Gulf itself. 2
That matters for IAG because the bull case still leans on premium demand holding up. “Since Q3 we have seen a rebound,” Chief Executive Luis Gallego said after last month’s results, adding that premium and corporate demand at British Airways was performing particularly well and that first-quarter bookings were strong. 4
Still, the cushion could fade faster than investors expect. Many airline hedges track crude oil rather than jet fuel itself, and J.P. Morgan estimates a sustained 10% rise in jet fuel prices could cut operating profit by 3% to 10% for large European carriers including IAG and Air France-KLM. Wizz Air could take a much larger hit. “Traditionally, the history is low-cost carriers … the ones that get squeezed the most in this environment,” Bank of America analyst Nathan Gee said. 6
For now, traders are treating IAG less like a buyback story and more like a real-time wager on oil, airspace and booking resilience. After a sharp relief rally across European stocks on Tuesday when hopes of de-escalation briefly lifted travel names, the shares are back under pressure. 7
