British Airways proprietor IAG sees income hit by £1.7bn jet gas shock

The owner of British Airways warned annual profits will be hit as the Iran war adds £1.7billion to its fuel bill.

But International Airlines Group (IAG) boss Luis Gallego said he did not believe there will be ‘any interruption this summer’ to flights caused by lack of fuel supplies.

The update came as the conflict continues to choke off crude oil flows from the Middle East.

The conflict has worried holidaymakers, and latest figures from aviation analytics firm Cirium showed 13,000 flights planned for May have already been cancelled.

Hopes of a deal between the US and Iran to end the impasse this week received a setback after forces clashed again in the Gulf, lifting the price of a barrel of Brent crude past $100.

Oil last month climbed as high as $126 and the soaring prices are battering airline profits.

Yesterday, Gallego said that fuel costs for IAG, which owns Iberia and Aer Lingus as well as BA, were expected to be £1.7billion higher this year than in 2025. The firm had already said it will have to raise fares as the price of jet fuel soars.

This was underlined yesterday as the group said it would recover 60 per cent of the higher fuel costs ‘through our revenue and cost management actions’.

It came as IAG reported a 77 per cent rise in pre-tax profits to £365m for the three months to the end of March.

‘While 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,’ it said.

‘As a result, we expect our profit to be lower than originally anticipated at the beginning of the year.’ The company also said its capacity growth this year would be lower than the 3 per cent rise expected back in February.

Shares fell 2.8 per cent, or 11.2p, to 385p. They are 8 per cent down since the end of February.

IAG said it was ‘confident of jet fuel supply in our main markets throughout the summer’ with the price a more pressing issue than availability.

But it added: ‘If the current conflict continues to restrict flows of both crude oil and jet fuel from the Middle East, there is the potential for supplies of jet fuel to be restricted on a global basis.’

IAG said 3 per cent of its capacity was exposed to the Gulf region before the start of the conflict, mainly operated by British Airways.

Destinations such as the United Arab Emirates, Qatar, Saudi Arabia, Bahrain, Israel, Jordan and Cyprus have been affected.

Aircraft have been redeployed from this network to serve routes such as Bangkok, Singapore and the Maldives to pick up demand where Middle East-based rivals have cut flights.

It is also planning for a ‘shift in demand to alternative winter destinations’ later this year, such as the Caribbean and Sri Lanka.

Gallego yesterday said: ‘IAG is uniquely positioned to navigate the current headwinds created by the Middle East conflict.

‘We have been planning for situations like this for years. We invested, a long time ago, in our own supply, our own fuel, our own inventory.’