Middle East: British Airways parent company warns that war will impact its profits

IAG Group, the parent company of British Airways and Iberia, reported a sharp increase in net profit in the first quarter on Friday but warned that the impact of the Middle East war would result in lower annual profits than originally anticipated. “The first quarter was relatively unaffected by the conflict,” but “we expect it to have a greater impact on the rest of the year as the rise in fuel costs is felt,” the group said in a statement.

IAG, which also owns Vueling and Aer Lingus, saw its net profit soar by 71% to 301 million euros in the first three months of the year. Its revenue increased by nearly 2% to 7.2 billion euros. It highlights “strong demand for (its) network and brands.” The war against Iran launched at the end of February by the United States and Israel resulted in Tehran blocking the Strait of Hormuz, causing a sharp drop in supply and a surge in oil prices, particularly affecting the aviation sector.

“We actively manage uncertainty”

If IAG had seen its annual profit increase by almost a quarter in 2025 thanks in part to a decrease in fuel costs, the price of kerosene more than doubled in the weeks following the start of the attacks on Iran. “We actively manage the uncertainty created by the rise in fuel prices and its impact, taking the necessary measures regarding revenue, costs, and capacity,” said director Luis Gallego, quoted in the statement. However, regarding the risk of potential fuel shortages, “we currently do not see any fuel supply issues in our key markets,” assured Luis Gallego.

The group specifies that about 3% of its capacity was exposed to the Gulf region before the start of the conflict, mainly operated by British Airways, which had announced the suspension of several routes to the region at the beginning of the war. The affected destinations include “the United Arab Emirates, Qatar, Saudi Arabia, Bahrain, Israel, Jordan, and Cyprus,” IAG said on Friday. But a large part of these flights “have been redeployed,” adding planes “on routes where seat availability is now reduced due to fewer flights operated by Gulf carriers” like “Bangkok, Singapore, and Mal.”