London, March 17, 2026, 16:35 GMT
Shares in International Consolidated Airlines Group SA picked up 0.9% to 355.65 pence as of 1619 GMT, just ahead of London’s close. Investors were digesting a Reuters story that British Airways parent IAG, along with other major European carriers, was getting ready to contest EU synthetic jet fuel regulations. Air France-KLM and Lufthansa also saw gains. Ryanair slipped. Despite today’s uptick, IAG remained 5.5% lower over the past five sessions. 1
Costs have muscled their way back into the spotlight for airlines, making the policy debate especially urgent. British Airways on Monday moved to prolong its temporary flight reductions across the Middle East. Meanwhile, Brent crude climbed past $101 a barrel on Tuesday, with the Iran war still squeezing supply routes. 2
The debate centers on eSAF—synthetic sustainable aviation fuel—which relies on renewable electricity, captured CO2, or green hydrogen to cut emissions from jet fuel. The EU wants sustainable aviation fuel use at 2% by 2025, ramping up to 6% by 2030, with eSAF specifically making up 1.2% from that year. Airlines for Europe (A4E) argues the projects already backed by investment only reach 0.7% of the requirement, warning that passengers could be hit with penalties totaling 7 billion to 9 billion euros. Most SAF options still trade at three to five times the price of standard jet fuel and provide just 0.3% of the worldwide supply. 3
The industry’s position remains up in the air. A4E leaders have a meeting set for Thursday. Camille Mutrelle, policy officer at Transport and Environment, pointed out that airlines are pushing to hold off on the eSAF mandate “until there is enough production online.” In her view, any delay would wipe out start-ups and strip Europe of its head start. 3
The stock’s already taken some hits this month. IAG topped full-year profit forecasts on Feb. 27—lower fuel bills and robust premium demand across the North Atlantic helped—yet the shares dropped that day on worries about missing 2026 targets and the risk of fuel costs climbing again. “Since Q3 we have seen a rebound,” Chief Executive Luis Gallego said at the time, pointing to solid first-quarter bookings. 4
IAG is moving to put the latest fuel price jump behind it. According to Reuters, the company has already locked in much of its fuel supply for the near future and isn’t planning to bump up fares any time soon—unlike Air France-KLM, which is raising long-haul ticket prices. J.P. Morgan figures that if jet fuel costs climb 10% and stay there, operating profit could take a 3% to 10% hit across IAG, Lufthansa, Air France-KLM and Ryanair. 5
Deal talk is simmering. On Monday, Portugal laid it out: IAG, Air France-KLM, and Lufthansa need to submit industrial plans that span every Portuguese airport—not just Lisbon—as they put in non-binding bids for a 44.9% TAP stake, with offers due by April 2. 6
The risk on the downside remains clear. British Airways’ recent schedule reductions point to ongoing disruption from the conflict, and TD Cowen’s Tom Fitzgerald isn’t optimistic, calling margin expansion “hard to envision” this year unless energy prices fall sharply. 7
IAG’s investor site points to a 1.5 billion euro excess cash return, while filings reveal the company executed yet another own-share transaction this Monday. 8
