IAG Profits Fall as Fuel Costs and Disruptions Hit

International Airlines Group (IAG), the parent company of British Airways, Aer Lingus, Iberia, and Vueling, reported a 12.9% drop in third-quarter pre-tax profits to 1.63 billion euro. The slump was primarily driven by a 30.4% surge in jet fuel costs linked to the Iran war, which added 570 million euro to expenses. IAG expects its total annual fuel bill to reach 8.9 billion euro.

Operational disruptions further impacted earnings. A National Air Traffic Services outage on September 8 resulted in over 2,000 flight cancellations, costing IAG between 25 million and 30 million euro. Additionally, Luis Gallego, Chief Executive of IAG, noted that recent hoax bomb threats across Europe forced flight diversions, including one Aer Lingus flight to France, requiring strict adherence to security protocols.

Subsidiary Aer Lingus reported a significant decline in performance, with nine-month operating profits slumping 57% to 108 million euro. Chief Executive Lynne Embleton attributed this to increased competition in the North Atlantic and rising carbon and supplier costs. To stabilize the business, Aer Lingus plans to cut up to 500 roles and reduce flying capacity by 6%.

To mitigate losses, IAG is managing capacity and increasing fares, with British Airways aiming to pass nearly 100% of higher fuel costs to passengers. Despite these pressures, Gallego stated the outlook for the remainder of the year and the start of next year remains positive due to cost-saving measures.