International Airlines Group (IAG), the parent company of British Airways, is flying high in 2026. In the first quarter, IAG reported a remarkable 77% jump in operating profit, reaching €351 million. Despite rising fuel costs driven by conflict in West Asia, IAG’s success has been fueled by robust demand, particularly in premium cabins and transatlantic markets. This balance of rising demand and careful management is shaping the current landscape of global air travel.
In its financial report for the three months ending March 31, IAG’s total revenue rose 1.9% to €7.18 billion. Profit after tax increased by 71% to €301 million. This growth, despite global uncertainty, underscores the resilience of the airline sector, particularly in key long-haul markets.
One of the key drivers of IAG’s performance was passenger revenue, which increased by 3.8% to €6.23 billion. Passenger revenue per available seat kilometer (PRASK) grew by 3.5%, driven by higher yields and fuller flights. IAG highlighted that premium cabins and transatlantic routes—both North and South—remained particularly strong. These segments represent half of the group’s capacity, and they continue to be a lifeline for profitability in global air travel.
However, IAG was candid about the road ahead. Rising jet fuel costs, largely driven by the West Asia conflict and disruption in the Strait of Hormuz, are expected to impact profitability later in the year. By the end of March, jet fuel prices had doubled from the end of February, reaching around $1,725 per metric ton. IAG acknowledged that while Q1 was relatively unaffected, the ripple effects will be felt in subsequent quarters.
Despite this challenge, IAG is actively managing the situation. With 70% of its fuel hedged for the year, the airline group is taking steps to adjust yields, manage costs, and optimize capacity. CEO Luis Gallego emphasized confidence in IAG’s business model. The group’s strong balance sheet is another asset—net debt has been reduced significantly, and liquidity remains high, standing at €12.73 billion.
IAG’s outlook has been adjusted slightly, with expectations of lower full-year profits due to fuel costs. Still, the airline is well-positioned for long-term success. The group plans to continue returning excess cash to shareholders, demonstrating confidence in its strategic direction.
For more travel news like this, keep reading Global Travel Wire
