Soaring fuel costs hit profit at British Airways owner IAG

IAG, the parent company of British Airways, reported lower profits as jet fuel prices rose sharply following disruption to oil exports through the Strait of Hormuz amid the Middle East conflict. The increase matters because airlines expect fuel costs to keep rising into next year, when they will have less protection from fixed-price fuel contracts, potentially putting pressure on fares and airline finances.

IAG’s pre-tax profit fell 16 per cent to €3bn in the nine months to September, while fuel costs including emissions charges rose 19 per cent to €6.4bn. It has hedged about 70 per cent of its fuel needs for the current financial year, but only 45 per cent for 2027. In the third quarter, revenue rose 4.5 per cent to €9.7bn, and IAG increased its dividend by 10 per cent to €0.053 per share.