LONDON, March 12, 2026, 15:49 GMT
- IAG slipped 3.23% to 362 pence in delayed London trading on Thursday.
- The group reports it’s well hedged for now, with no immediate plans to hike fares.
- Travel is flashing new warning lights: On the Beach has withdrawn its outlook, citing a slowdown in Mediterranean bookings.
Shares of International Consolidated Airlines Group SA dropped 3.23% to 362 pence on Thursday, tracking oil’s rebound above $100 a barrel. Investors are on alert for higher fuel costs biting into airline profits. Notably, British Airways parent IAG had said just days earlier its fuel hedges offered some near-term relief.
This shift is notable—back in March, IAG stood out as one of Europe’s more resilient full-service carriers. Not even a fortnight has passed since the group surprised with a 2025 operating profit of 5.02 billion euros, topping forecasts, and revealed plans for 1.5 billion euros in returns to shareholders. That includes a 500 million euro buyback, slated to wrap up by end-May.
The market’s now wondering if that narrative holds up against a fresh energy shock. On March 10, IAG said it isn’t looking to hike fares right away and highlighted its strong near-term hedging position. The company uses contracts to lock in part of its future fuel costs, with a policy that lets it hedge as much as 75% of anticipated near-term fuel needs on a rolling three-year basis.
IAG’s approach keeps it on firmer ground than some competitors—at least for now. Air France-KLM announced Thursday it’s hiking long-haul fares, while SAS disclosed a temporary price shift earlier in the week. Spot jet fuel in Northwest Europe settled at $1,536 a metric ton on Thursday, just shy of Monday’s $1,633 intraday high.
Still, hedges offer only partial cover. Jet fuel has surged—prices now twice what they were before the conflict with Iran broke out—easily eclipsing the one-third climb in crude, as refiners slap on steeper premiums to processed oil. “The longer the disruption goes on, the greater the impact on energy prices and in turn global inflation,” said AJ Bell’s Danni Hewson. Reuters
Signs of pressure are cropping up across the network. British Airways has cut its winter flights to Abu Dhabi short, blaming “continuing uncertainty”. On Thursday, package tour operator On the Beach pulled its annual profit outlook following a sharp drop in bookings for Turkey, Greece, Cyprus, and Egypt—early evidence that leisure travel demand is faltering even outside the Gulf. Reuters
This point is crucial for IAG—the optimistic scenario is still tied to resilient premium demand. “Since Q3 we have seen a rebound,” Chief Executive Luis Gallego said following last month’s results. He also highlighted that both premium and corporate traffic at British Airways were faring especially well, with first-quarter bookings described as strong. Reuters
Even so, that buffer might vanish sooner than investors realize. Most airline hedges are pegged to crude, not jet fuel itself. J.P. Morgan figures a persistent 10% uptick in jet fuel would shave 3% to 10% off operating profit for the big European names like IAG and Air France-KLM. Wizz Air faces a steeper downside. “Traditionally, the history is low-cost carriers … the ones that get squeezed the most in this environment,” said Bank of America’s Nathan Gee. Reuters
At this point, IAG is playing more like a punt on jet fuel prices, airspace risk, and booking trends than a straightforward buyback bet. Tuesday’s burst higher for European travel stocks—momentarily buoyed by de-escalation optimism—didn’t stick. Shares have slipped again.
