British Airways owner IAG hit by soaring fuel costs

International Airlines Group, the parent company of British Airways, has warned that its annual profit will come in lower than previously expected as surging jet fuel prices and ongoing supply disruptions weigh heavily on the aviation sector.

The company said it now expects jet fuel costs to reach around 9 billion euros ($10.56 billion) this year, with roughly 70% of its fuel requirements already hedged for the remainder of 2026. Despite this partial protection, management cautioned that cost pressures remain significant, News.Az reports, citing Reuters.

The airline group, which also owns Iberia and Aer Lingus, did not provide a specific revised profit forecast. However, the outlook signals a more challenging year than previously anticipated, following a period of strong recovery in global travel demand.

Investors reacted negatively earlier this year when IAG chose not to issue full-year guidance, reflecting growing uncertainty across the aviation industry. The latest warning is likely to reinforce concerns about cost volatility and weaker margins.

Analysts say airlines are facing a particularly difficult environment due to rising energy prices and broader supply chain disruptions linked to the ongoing Iran conflict. Fuel remains one of the largest operating expenses for carriers, meaning even modest price increases can significantly affect profitability.

The sector has also been grappling with uneven travel demand, capacity constraints, and higher operational costs, all of which are squeezing margins despite strong passenger volumes on key international routes.

IAG’s warning adds to a broader trend across global airlines, many of which have recently flagged increased pressure from fuel costs and geopolitical instability affecting air routes and logistics.

While demand for international travel remains strong, especially in long-haul markets, airlines are increasingly navigating a fragile balance between revenue growth and rising input costs heading into 2026.

News.Az 

By Aysel Mammadzada