British Airways’ parent company, International Airlines Group (IAG), anticipates a negative impact on its profits due to unexpected fuel expenses totaling approximately two billion euros (£1.72 billion) amidst the ongoing Iran oil crisis. IAG’s CEO, Luis Gallego, stated that the company is actively addressing the uncertainties stemming from the surge in fuel prices by implementing necessary measures related to yields, costs, and capacity adjustments.
Despite the projected decrease in profits for the year compared to initial estimates, Gallego expressed confidence in IAG’s business model and strategic approach. He reassured that the company is currently not experiencing any disruptions in jet fuel supply at its primary hubs or markets and remains optimistic about fuel availability throughout the summer.
Recent data revealed that 120 flights from the UK have been canceled this month due to escalating jet fuel prices and concerns over potential shortages. Aviation analytics firm Cirium reported a 0.53% reduction in departures from UK airports in May, with a further decrease of 36 outbound flights planned for June, resulting in a 0.2% capacity drop equating to 7,972 fewer seats.
Globally, airlines canceled around 13,005 flights scheduled for May, representing a 1.5% reduction in capacity with nearly two million fewer seats available. Industry experts highlighted the need for airlines to assess and potentially consolidate or cancel underperforming flights to mitigate the impact of fuel supply constraints.
In response to the escalating fuel costs and supply challenges, Lufthansa’s airline group previously announced plans to cancel 20,000 flights over the next six months to optimize fuel consumption. The ongoing tensions in Iran, particularly in the Strait of Hormuz, have led to heightened oil prices and concerns regarding jet fuel availability.
Transport Secretary Heidi Alexander reassured the public that summer travel plans are unlikely to face significant disruptions due to increased fuel imports from the United States and heightened production by refineries. Additionally, the government has implemented temporary measures allowing airlines to combine passengers from different flights onto fewer aircraft to conserve fuel resources.