The owner of British Airways, Aer Lingus and Iberia, International Airlines Group (IAG), has warned that the war with Iran will increase its aviation fuel costs this year by about 2 billion euros, the Financial Times writes, citing company reporting.
According to the head of IAG, Luis Gallego, at the moment the problem lies primarily in the price of fuel, and not in its availability: the company is confident that it will be able to ensure supplies of jet fuel in its main markets during the summer season. However, he warned that if the conflict continues to limit supplies of oil and jet fuel from the Middle East, shortages could occur on a global scale.
IAG said it had hedged about 70% of its jet fuel needs for the year, but now expects overall fuel costs to rise to €9 billion, up from €7 billion previously forecast. The company expects to offset about 60% of the additional costs through savings, operational measures and higher ticket prices.
IAG’s first-quarter pre-tax profit rose 77% to 422 million euros, revenue rose 1.9% to 7.2 billion euros and passenger numbers stood at 26 million. The company said the first quarter was relatively lightly affected by the Middle East conflict, but the impact would be significantly greater over the rest of the year. Following the report, IAG shares were down about 4% on Friday morning.