British Airways’ parent company expects £1.7bn hit from higher fuel bill

British Airways’ parent company warned its profits will be hit as it expects to spend about two billion euro (£1.72 billion) more than planned on fuel this year amid the Iran oil crisis.

International Airlines Group (IAG) chief executive Luis Gallego said it is “managing the uncertainty” caused by the fuel price increase by “taking the necessary action on yields, costs and capacity”.

He added: “Whilst the impact of the higher fuel price will inevitably lead to lower profit this year than we originally anticipated, we are confident in our business model and strategy.”

Mr Gallego said IAG is “not currently seeing any jet fuel supply disruptions across our main hubs or markets” and is “confident in fuel availability through the summer”.

Iran continues to have a stranglehold on tankers passing through the Strait of Hormuz, leading to a surge in oil prices and concerns over jet fuel shortages.

Global figures released this week by aviation analytics company Cirium show 13,005 flights planned for May were cancelled between April 10 and April 21, equivalent to 1.5%.

IAG said it has seen “strong demand across most of our markets” but “softer demand” in the eastern Mediterranean.

The company recorded a pre-tax profit of 422 million euro (£365 million) during the three months to the end of March.

That was a 76.6% increase from 239 million euro (£207 million) a year earlier.

Mr Gallego attributed the firm’s “strong first quarter” to “continued strong demand for our networks and airline brands”.

He went on: “IAG is uniquely positioned to navigate the current headwinds created by the Middle East conflict thanks to our leading positions across diverse markets, strong brands, structurally high margins and strong balance sheet, as well as a strong track record of execution.”

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