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

By Aarin Chiekrie — 2026-05-08

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “British Airways owner IAG had a strong first quarter, with operating profits rising sharply thanks to slim revenue growth and very tight cost controls.

“Given the timing of the Middle East conflict, it’s had very little impact on first-quarter results.

“Much more important is the outlook for the rest of the year, and so far, IAG is largely on schedule.

“Yes, full-year profits and free cashflows will be lower than originally expected, and capacity growth this year has been wound back a touch from its original three per cent target.

“But on the whole, IAG remains in good shape. We think it’s much better positioned to navigate the current market challenges better than most of its peers, thanks to its tilt towards more premium passengers.

“IAG has hedges in place for around 70 per cent of its fuel needs this year.

“That means, despite a near doubling in fuel prices, the group’s total fuel costs this year are only expected to rise from €7.1billion to around €9billion.

“With its diverse portfolio of airlines operating with structurally higher margins than most of the competition, IAG expects to offset around 60 per cent of the increased fuel costs this year through capacity reallocation, pricing actions and even tighter cost controls.

“Only around three per cent of the group’s capacity was exposed to the Gulf region prior to the conflict, and a large part of this has already been redeployed to routes with reduced supply, such as Bangkok and Singapore, due to fewer flights by Middle Eastern airlines.

“All in, it was a strong showing from IAG.

“The balance sheet remains in great shape, and it still has the confidence to continue with the remaining €1billion of its €1.5billion share buyback programme this year.”

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