London, May 9, 2026, 20:11 BST
International Consolidated Airlines Group SA flagged that full-year profit will fall short of previous guidance after jet fuel expenses jumped. The British Airways parent is also cutting back on capacity and lowering its free-cash-flow outlook, despite a steep first-quarter profit increase. Operating profit for the period landed at €351 million, up 77.3%, while revenue hit €7.18 billion.
Timing is critical here. IAG moves into the busy summer months with demand steady, but fuel prices now playing a bigger role in profit forecasts. The company reported that booked revenue for the second quarter hit 80%—matching the usual seasonal trend. Capacity growth, though, won’t reach the 3% bump IAG projected back in February. Capacity refers to the total number of seats airlines offer.
Still, the stock finished lower. IAG ended Friday at 385 pence, slipping 2.83%. RBC’s Ruairi Cullinane maintained a Buy, though he trimmed his price target down to 465 pence from the earlier 480, MarketScreener reported, citing dpa-AFX Analyser.
IAG estimates its 2026 fuel bill at roughly €9 billion, using the fuel curve as of May 5. The company said it’s 70% hedged for the remainder of the year. Hedging—through financial contracts—can blunt volatility in fuel prices, but if prices remain elevated, the expense still lands.
According to Reuters, Chief Executive Luis Gallego said the group is “taking the necessary action on yields, costs and capacity.” J.P. Morgan analyst Harry Gowers pointed out the conflict might prove the group’s “strong free cash flow generation” is still solid, despite some short-term pressure. MarketScreener
The tone from IAG on supply came off as cautious rather than reassuring. The company said services in its core markets should remain unaffected “throughout the summer,” crediting solid supply chains and inventories. Still, IAG flagged the risk that if crude and jet fuel flows from the Middle East stay limited for longer, global jet fuel supply could face pressure. Sky News
IAG trimmed its operations on vulnerable routes, shifting roughly 3% of its overall capacity that had previously been concentrated in the Gulf—primarily through British Airways, while Iberia and Vueling had less exposure. The company reported it’s now flying those aircraft on routes like Bangkok, Singapore and Male. Iberia and Vueling, for their part, redirected planes from Tel Aviv flights into domestic Spanish service.
It’s not just IAG feeling the squeeze. According to Reuters, Air France-KLM, easyJet, and several other airlines have signaled they’re also taking a hit as fuel prices surge. That leaves a big question hanging over the sector: how much can European carriers really raise ticket prices before passengers start to balk?
But the pass-through isn’t holding up. IAG figures it can claw back roughly 60% of the fuel price jump via a mix of revenue tweaks and cost moves; stubborn customers or a prolonged fuel crunch through winter might leave the rest uncovered, pressuring management to cut more capacity or watch margins shrink more quickly than planned.
IAG, the company behind British Airways, Iberia, Vueling, Aer Lingus, and IAG Loyalty, lists its shares in both London and Spain. The group leans heavily on premium and transatlantic traffic, but running airlines across multiple regions leaves it vulnerable when fuel prices shift, currencies swing, or routes get shaken up.
