International Airlines Group, the owner of British Airways, has cut its annual capacity outlook after quarterly profits were hit by soaring fuel costs and travel demand suppressed by the war in the Middle East.
The group, which also owns Iberia and Aer Lingus, said its capacity would remain flat in 2026 compared with 2025, abandoning earlier plans to grow capacity by around 3 per cent this year.
IAG said holidaymakers have turned to budget rivals as prices have risen in recent months, and that consumers have been less keen to book holidays near the Middle East, including in Cyprus and Turkey.
IAG chief executive Luis Gallego said: "Europe is the most competitive region. We're seeing elevated capacity growth, in particular where there are ultra-low-cost carriers."
The company said budget airlines putting on more flights in Europe had "limited our ability to recover the fuel cost increase through pricing."
Profits down sharply
Profits slumped 35 per cent to £626million in the three months to 30 June, down from £940million a year earlier, after a sharp increase in fuel costs and emissions charges. Sales rose just 0.2 per cent to £7.6billion.
IAG reiterated plans to recoup about 60 per cent of its higher fuel bill through higher ticket prices and cost-cutting measures. It said it expects its long-haul markets to "remain positive" while short-haul trips will be "competitive," and that around 57 per cent of its seats have been booked for the second half of the year.
The update came after low-cost rival Ryanair said last week it had been forced to slash summer ticket prices due to weaker customer demand, which hurt its profits.
