British Airways passengers face higher fares as owner International Airlines Group (IAG) seeks to offset a €2bn (£1.7bn) increase in fuel costs this year caused by the Iran war. The group, which also owns Aer Lingus, Iberia, Vueling and Level, said its annual fuel bill was now expected to reach about €9bn, up from a previous forecast of €7.1bn.
IAG expects to recover around 60% of the additional costs through 'revenue and cost management actions', with fare rises loaded primarily on premium brand BA. Chief executive Luis Gallego said: 'Unfortunately, for example, BA that is a more premium brand, they are going to have a higher pass-through compared, for example, with Vueling.' Recovering the €1.2bn would add an estimated 8% to BA’s fares based on its 2025 revenues.
Gallego warned: 'The impact of the higher fuel price will inevitably lead to lower profit this year than we originally anticipated.' Analysts had forecast operating profits of about €5.2bn, up from last year’s record €5bn, but this is now in doubt.
IAG said it was 'actively managing the uncertainty' and not experiencing fuel scarcity in its main markets. Chief financial officer Nicholas Cadbury said BA believed it was in a better position than rivals after 'significant investments in the UK and BA in depots and fleet'. Global oil prices have reached peaks of $126 a barrel since the start of the conflict, from $72 just before the war, and were trading at just above $100 on Friday.
IAG reported a pre-tax profit of €422m for the first three months of the year, up 77% on the same period last year, with revenue rising 1.9% to €7.2bn. About 2m airline seats have been cut from schedules this month across the industry, and UK airlines have been given more flexibility to consolidate flights on popular routes if needed.
