British Airways owner IAG reported lower third-quarter profit on Friday, 6 November, as a sharp rise in fuel costs and operational disruption offset strong revenue growth. Operating profit before exceptional items fell to €1.73 billion from €2.05 billion a year earlier, missing analysts' consensus of €1.81 billion. Revenue rose 4.5 per cent to €9.74 billion, supported by strong passenger demand, higher cargo revenue and continued growth at its Loyalty business.

Fuel costs bite

Total fuel costs jumped 30.4 per cent in the quarter, and air traffic control outages disrupted operations. IAG now expects its total fuel bill for the year to be €8.9 billion, and said it is 45 per cent hedged against price moves for 2027. The group also warned that its fuel bill in 2027 will be meaningfully higher as hedging protection declines, raising the prospect of higher air fares. Chief executive Luis Gallego said the group had achieved an operating margin before exceptional items of 17.7 per cent, "despite the very high price of jet fuel and a number of one-off disruption events".

Capacity to fall for first time since 2022

IAG forecast that its annual capacity would be slightly lower this year, the first decline since 2022, as flight disruptions in the Middle East stemming from the Iran war weighed on operations. Even so, 85 per cent of expected seats for the fourth quarter have been booked, with bookings for the first quarter of 2027 looking strong. Reflecting that strength, IAG raised its interim dividend by 10 per cent to €0.053 per share and confirmed that the final €500 million tranche of its €1.5 billion share buyback programme has now commenced. Shares rose in early trading after the results, and stood 1.29 per cent higher at 431.90p in afternoon trade.