British Airways’ parent company has issued a profit warning due to an expected overspend of around two billion euro (£1.72 billion) on fuel this year amidst the Iran oil crisis. International Airlines Group (IAG) CEO Luis Gallego stated that they are managing the fuel price uncertainty by taking necessary actions on yields, costs, and capacity. Despite anticipating lower profits than initially forecasted, Gallego expressed confidence in the company’s business model and strategy.
Gallego assured that IAG is currently not experiencing any disruptions in jet fuel supply at their main hubs or markets and remains confident in fuel availability throughout the summer. Recent data revealed that 120 flights from the UK have been canceled this month due to surging jet fuel prices and concerns of shortages, representing a 0.53% reduction in scheduled departures.
Furthermore, the number of outbound flights planned for June has decreased by 36 compared to the previous week, resulting in a 0.2% capacity reduction of 7,972 seats for the month. Globally, approximately 13,005 flights scheduled for May were canceled, reducing capacity by nearly two million seats. Industry experts, including Julia Lo Bue-Said and Paul Charles, highlighted the necessity for airlines to assess and adjust flights to cope with the fuel supply challenges.
In response to the crisis, Lufthansa’s airline group announced the cancellation of 20,000 flights over the next six months to conserve fuel. Despite concerns over fuel shortages due to Iran’s actions in the Strait of Hormuz, Transport Secretary Heidi Alexander reassured that summer holiday plans are unlikely to face significant disruptions. The government has implemented temporary measures to address the fuel supply issues, including allowing airlines to consolidate passengers onto fewer planes to save fuel.
