British Airways parent IAG reported strong corporate travel demand in the third quarter despite higher fares, rising fuel costs and disruption linked to conflict in the Middle East.
The group reported “resilient” revenue growth on Friday (6 November), despite a 0.2 per cent year-on-year decline in capacity caused by the conflict and multiple outages across the UK’s air traffic control system in September.
IAG chief executive Luis Gallego said corporate demand has remained strong throughout the year, despite continued geopolitical uncertainty.
“Corporate travel performance is strong... It was [strong] before the Iran conflict and it continues. The growth is mainly driven by yield and demand is very strong across all sectors, particularly in technology and banking,” he said.
British Airways chief executive Sean Doyle said corporate demand from the technology and financial services sectors remained “really strong” during the quarter, particularly on transatlantic routes. The carrier also saw an uptick in demand from small and medium-sized businesses trading in and out of the UK.
Long-haul business travel demand to South Asia and the wider Asia-Pacific region also picked up during the quarter, Doyle said. Business travel demand into Asia-Pacific rose by more than 11 per cent in Q3, “and we see that strengthening as we head into the winter”.
“We’ve done very well to pick up a lot of traffic between the US and markets like India,” Doyle added. “Our [London] hub is a really strong alternative for corporates who have been bypassing the Gulf gateways. We see that being very strong in Q4 and continuing into Q1 forward bookings.”
IAG – which also includes Aer Lingus, Iberia and Vueling – described rising fuel prices as a “major headwind”, echoing comments made earlier this week by European rivals Lufthansa and Air France-KLM. Its quarterly fuel costs rose by €565 million year on year, and the group now expects its annual fuel bill to reach €8.9 billion. IAG is currently 45 per cent hedged for 2027.
To mitigate the impact, Gallego said the group would reduce winter capacity “in a disciplined way to protect profitability”. IAG also cut its full-year capacity growth forecast for the second time this year. Capacity is now expected to be “slightly down” on 2025 levels, compared with the previous quarter’s forecast of “flat” capacity year on year.
Q3 results
IAG’s third-quarter revenue increased 4.5 per cent year on year to €9.4 billion, largely driven by long-haul yields, particularly in the North Atlantic market. The region accounted for 32 per cent of the group’s Q3 capacity.
Passenger revenue across the group increased by 3.8 per cent to €8.6 billion, while operating profit before exceptional items fell by 15.9 per cent to €1.7 billion, down from a ‘record’ €2.05 billion a year earlier.
Capacity, measured in available seat kilometres (ASKs), fell by 0.2 per cent year on year, while passenger revenue per ASK increased by 4.1 per cent.
Load factor fell 0.6 percentage points to 88 per cent.
British Airways reported a quarterly operating profit of £608 million, down £205 million year on year. Iberia’s profit fell by €58 million to €452 million, while Aer Lingus’s Q3 profit fell by €28 million to €142 million.
Spanish low-cost carrier Vueling reported a profit of €257 million, down €15 million from Q3 2025. It recorded the highest operating margin among the group’s airlines, at 23.8 per cent.
IAG Loyalty’s Q3 profit increased by 8 per cent to £152 million.