British Airways fares will increase to recoup most of a €2bn (£1.7bn) rise in fuel costs this year, parent company International Airlines Group (IAG) has said. The group expects to recover about 60% of the additional bill through 'revenue and cost management actions', primarily loaded on BA rather than its sister airlines.
Luis Gallego, IAG's chief executive, said BA's more premium brand would see a higher pass-through of costs compared to budget carriers like Vueling. Recovering the €1.2bn would add an estimated 8% to BA's fares based on its 2025 revenues.
Speaking as IAG reported first-quarter results, Gallego said the higher fuel price would 'inevitably lead to lower profit this year than we originally anticipated'. He added that the group was not experiencing fuel scarcity in its main markets and was confident about availability through the summer.
The fuel cost increase stems from the war in Iran, which has pushed oil prices to peaks of $126 a barrel. IAG's annual fuel bill is now expected to be around €9bn, up from the forecast €7.1bn, with 70% of its supply hedged.
About 2m airline seats have been cut from this month's schedules industry-wide. While only 111 flights have disappeared from London Heathrow, BA's main base, fears persist that jet fuel shortages could cause further summer cancellations.
