LONDON - IAG, parent group of British Airways and Spanish carrier Iberia, said Friday that the Middle East war will lower its annual profits despite a strong start to 2026.
"Whilst the first quarter was relatively unaffected by the Middle East conflict we expect it to have a more substantial impact throughout the rest of the year as the increase in the fuel cost starts to manifest itself," IAG said in an earnings statement.
"As a result we expect our profit to be lower than originally anticipated at the beginning of the year."
Oil prices have soared since the start of the US-Iran war in late February, resulting in much higher jet fuel costs.
IAG chief executive Luis Gallego said the group's fuel costs would increase by two billion euros this year, or more than a quarter, compared to 2025.
"But we expect to recover around 60 percent of this higher fuel cost because of the revenue and cost management initiatives that we are taking," he told a call with media.
Gallego added that while there "is less jet fuel coming from the Middle East... there are other places with record supplies", such as the United States.
"This is a global supply chain," he said.
IAG, owner also of Irish airline Aer Lingus and Spanish carrier Vueling, said net profit surged 71 percent to 301 million euros ($354 million) in the first quarter compared with the January-March period last year, helped by higher demand and cost-cutting.
Revenue grew 1.9 percent to 7.18 billion euros.
The company's net profit last year jumped 22 percent to 3.34 billion euros thanks largely to lower fuel costs. The company typically does better in the second half of the year owing to the peak summer season.
Following the update, IAG's share price fell 2.2 percent on London's benchmark FTSE 100 index, which was down 0.5 percent overall, while oil prices climbed.
The company's update came one day after Emirates Group announced a three percent rise in annual profits to $5.7 billion despite severe disruption from the Middle East war.
Air France-KLM has meanwhile cut its 2026 outlook, saying higher fuel prices would expand its fuel bill by more than a third.
- AFP