British Airways Parent IAG Warns of £1.7 Billion Fuel Cost Hit Amid Iran Oil Crisis

International Airlines Group (IAG), the parent company of British Airways, has warned that rising fuel prices linked to the ongoing Iran oil crisis are expected to increase its fuel bill by around €2 billion (£1.72 billion) this year.

The airline group said the sharp rise in oil prices and concerns over fuel supplies in the Gulf region would likely reduce profits compared to earlier forecasts.

IAG chief executive Luis Gallego said the company is “managing the uncertainty” by adjusting pricing, costs, and flight capacity while continuing to respond to changing market conditions.

The warning comes as tensions around the Strait of Hormuz continue to disrupt global oil markets. Iran’s actions affecting tanker traffic through the waterway have triggered concerns over jet fuel availability and pushed fuel prices higher worldwide.

Despite the challenges, Gallego said IAG does not currently expect major interruptions to jet fuel supplies during the busy summer travel season. He noted that while supplies from the Middle East have tightened, other regions including the United States are increasing production and exports.

The company also said it has been preparing for potential supply disruptions for years by investing in fuel supply infrastructure at its major airport hubs.

IAG reported a strong first quarter for 2026, recording a pre-tax profit of €422 million (£365 million) for the three months ending March 31 — a 76.6% increase compared to the same period last year.

The group said travel demand remains strong across most markets, although demand in parts of the eastern Mediterranean has softened amid regional instability.

At the beginning of the conflict in late February, around 3% of IAG’s flight capacity was linked to Gulf routes, mainly operated by British Airways. The airline has since redirected part of that capacity to destinations experiencing increased demand, including Bangkok, Singapore, and the Maldives.

British Airways has also added extra flights this summer to destinations such as India and Nairobi to meet rising demand for direct international travel.