British Airways owner IAG has moved to allay fears of a jet fuel shortage that could force flight cancellations this summer, but cautioned investors that the ongoing conflict in the Middle East will lead to lower earnings.
Conflict Impact on Fuel Prices
The London-listed carrier reported that the pan-regional war, now in its third month, will have a “substantial impact throughout the rest of the year” as kerosene prices, which have doubled compared to pre-war levels, begin to affect the market. However, IAG noted that 70 percent of its jet fuel is hedged at prices set before the US’s initial strikes on Iran, a measure that will protect the business from short-term supply shocks until the end of the year.
Profit Surge Despite Challenges
In its first-quarter update, the aviation group—which also owns Aer Lingus and Vueling—announced a profit jump of over 77 percent for the first three months of 2026, despite the war affecting the last 30 days of the reporting period. IAG attributed this significant rise to revenue growth and the “limited impact on cost from the Middle East conflict.”
Luis Gallego, chief executive of IAG, stated that the group sees “no issues with fuel availability,” but acknowledged that higher input costs would inevitably reduce the company’s full-year profit expectations. He emphasized that the primary challenge is fuel prices rather than supply.
“Whilst the impact of the higher fuel price will inevitably lead to lower profit this year than we originally anticipated, we are confident in our business model and strategy, which has made us one of the best-performing airline groups in the world, and which gives us the opportunity to prove our resilience,” Gallego said.
The carrier has already passed on much of the increased jet fuel costs to consumers through higher ticket prices, raising the average fare. The group’s update on Friday highlighted these adjustments as part of its strategy to mitigate the financial impact of the conflict.
