IAG Plans First Capacity Cut Since 2022 as Airline Profits Diverge

what happened

IAG now forecasts that its 2026 capacity will edge down compared with last year, which would mark its first contraction since 2022. The airline group points to lost flights in the Middle East, disruption from the regional conflict and pricier jet fuel, and says it is putting profitability first.

IAG shares climbed to 437 pence on Friday, their highest level since August 24, after the results, according to TradingView. The stock is up 13.7% from the month's low and has traded between 395 and 448 pence since July 16. In January to September, British Airways profit dropped 8.8% to £1.493 billion, Aer Lingus earnings more than halved to €108 million, and IAG Loyalty grew 17.7% to £391 million.

Deliveries for 2026 were trimmed to 12 aircraft from 16, including three Boeing 737s. The timing of Vueling's first Boeing jet remains unclear because seat certification has been delayed. CEO Luis Gallego said the proposed terms for selling TAP did not match the group's strategy, and IAG plans to expand Brazil flights via Iberia while exploring other regional partnerships.

why it matters

The results point in two directions: weaker British Airways and Aer Lingus earnings contrast with a faster-growing loyalty business. The capacity trim shows management choosing margins over volume. For the airline sector, fuel costs remain the central pressure point.

market impact

Airline stocks: higher fuel costs pressure margins; capacity cuts aim to protect profit

• ↔IAG shares mixed — weaker BA and Aer Lingus profit offsets strong loyalty growth and the capacity cut

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