IAG Trims Capacity and Capex as Fuel Costs Climb, Q3 Profit Falls

what happened

British Airways owner IAG has cut its capacity and investment expectations again. The group is trimming routes to focus on profitable flying as jet fuel prices have surged. It now expects full-year capacity to be slightly lower than in 2025, having previously forecast it to be flat. Capital expenditure is now seen at 3.1 billion euros, down from 3.4 billion euros.

For the third quarter, after-tax profit came in at 1.23 billion euros versus 1.4 billion a year earlier, while revenue rose 4.5% to 9.74 billion euros. Operating profit before exceptional items, the metric the company prefers, fell 16% to 1.73 billion euros. Analysts had expected 1.81 billion euros, according to a company-provided consensus.

IAG still expects a full-year operating margin of 12% to 15%, though it now sees fuel costs of 8.9 billion euros, up from 8.6 billion euros in late July.

why it matters

The update shows how airlines are passing higher jet fuel costs through to fares and cutting unprofitable flights. Lower capacity and higher prices support sector margins, but the fuel bill underlines pressure from elevated oil-product prices on airline shares.

market impact

Airlines: higher fuel costs squeeze margins, while capacity cuts limit the damage

• ▼IAG shares pressure down — higher fuel costs pressure profitability and the capacity outlook

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