IAG stock: Q3 profit falls as fuel costs reshape 2026 outlook

International Airlines Group reported a weaker third quarter on November 6 as higher jet-fuel costs and operational disruption outweighed strong revenue growth. Aviation Week said the parent of British Airways, Iberia, Vueling, Aer Lingus and LEVEL is now planning slightly lower full-year capacity than in 2025 while focusing on profitable flying.

IAG stock traded at 5.49 euros on Lang & Schwarz at 12:14 CET on Tuesday, November 10, 2.23 percent above the Xetra close of Monday, November 9. The quote was in line with the company's Madrid listing at the time of the report.

Fuel costs narrow the summer profit

Third-quarter revenue rose 4.5 percent year over year to 9.7 billion euros, driven by long-haul yields across the main markets and particularly strong performance in the North and South Atlantic. Operating profit before exceptional items fell to 1.7 billion euros from about 2 billion euros a year earlier, leaving the margin at 17.7 percent.

Total fuel costs increased 30.4 percent in the quarter despite hedging benefits. Non-fuel unit costs also rose 3.4 percent, with air-traffic-control outages and other disruptions contributing to the increase. Profit after tax declined 12.2 percent to 1.2 billion euros.

IAG said revenue growth was not sufficient to offset high fuel prices and disruption. Chief Executive Luis Gallego nevertheless described the quarter as resilient, while the company pointed to strong pricing and continued demand on long-haul routes.

Capacity discipline shapes the outlook

For the full year, IAG expects fuel costs of 8.9 billion euros, above its earlier range of 8.3 billion to 8.6 billion euros. Non-fuel unit costs are now expected to increase by around 1 percent, and capital spending has been reduced to 3.1 billion euros from 3.4 billion euros. The group also expects 12 aircraft deliveries in 2026, four fewer than previously planned.

Management maintained its expectation for an operating margin before exceptional items of at least 12 percent in 2026, within its through-the-cycle target range of 12 percent to 15 percent. IAG said 85 percent of expected fourth-quarter bookings were secured and that first-quarter 2027 bookings were strong.

The regional picture remains uneven. IAG reduced capacity in Europe to protect profitability, while Middle East disruption cut capacity in the Africa, Middle East and South Asia region. British Airways, Iberia and Vueling are reallocating aircraft and crews, making capacity discipline and fuel hedging key factors for the coming quarters.

European equity markets remain sensitive to energy prices, travel demand and geopolitical disruption; see current market reports.

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