International Consolidated Airlines Group (LSE:IAG) on Friday reported third-quarter operating profit before exceptional items of €1,726 million, down from €2,053 million a year earlier, as higher jet fuel costs and operational disruption offset strong revenue growth.
The London-listed owner of British Airways, Iberia, Aer Lingus and Vueling said quarterly revenue rose 4.5% to €9,744 million, with operating margin before exceptional items falling to 17.7% from 22.0% a year earlier.
For the nine months to 30 September, revenue increased 2.3% to €25,808 million, while operating profit before exceptional items fell 11.4% to €3,483 million, giving a margin of 13.5% against 15.6% in the prior period.
Passenger revenue for the quarter rose 3.8% and cargo revenue increased 3.9%, while other revenue, boosted by another strong quarter from IAG Loyalty, grew 11.3%.
IAG said non-fuel unit costs rose 3.4% in the quarter, hit by disruption including major air traffic control outages, while total fuel cost increased 30.4% net of hedging benefits.
IAG Loyalty increased its profit 8% to £152 million, at a margin of 18.9%.
Resilient quarter driven by North Atlantic
Chief executive Luis Gallego said the group had "delivered another resilient quarter", with strong yield performance across all markets "despite the very high price of jet fuel and a number of one-off disruption events, clearly demonstrating the quality of our business."
The North Atlantic was the standout region, with unit revenue up 11.0% on broadly flat capacity; British Airways grew North Atlantic capacity 2.2% while lifting unit revenue 12.0%.
European performance was weaker amid heavy competitor capacity growth, prompting IAG to cut European capacity by 1.2%, concentrated at Iberia and Vueling, to protect profitability.
The Africa, Middle East and South Asia region saw capacity fall 19.0% as flights to Gulf destinations remained suspended, though unit revenue there rose 13.2%, helped by business travellers routing via London.
Net leverage stood at 0.6x at 30 September, with net debt of €4,220 million, down from €5,948 million at the end of 2025, and total liquidity of €12,490 million.
IAG declared an interim dividend of €0.053 per share, up 10% from €0.048 a year earlier, and said it had commenced the final €500 million tranche of its €1.5 billion share buyback programme, due to complete by the end of February 2027.
Looking ahead
For the full year, IAG now expects capacity to be slightly down versus 2025, reflecting the absence of Middle East flying and disruption to date, with non-fuel unit costs expected to rise by around 1% and total fuel cost expected at €8.9 billion based on current fuel curve and exchange rate assumptions.
Capital expenditure guidance for the year has been reduced to €3.1 billion, with only 12 aircraft now expected to be delivered in 2026, down from 16 guided at the half-year, following delivery delays affecting Boeing 737s at Vueling and an Airbus A321neo for British Airways.
The group said it remains on track to deliver a full-year operating margin before exceptional items of at least 12%, within its 12% to 15% through-the-cycle target range, with 85% of fourth-quarter forward bookings already secured and first-quarter 2027 bookings currently strong.