British Airways’ parent company is anticipating a negative impact on its profits due to an unexpected increase in fuel costs amounting to around two billion euros (£1.72 billion) this year amidst the ongoing Iran oil crisis.
Luis Gallego, the chief executive of International Airlines Group (IAG), mentioned that the company is actively managing the uncertainties arising from the surge in fuel prices by implementing necessary measures related to yields, costs, and capacity adjustments. Despite the projected decrease in profits for the year, Gallego expressed confidence in the company’s business model and strategic direction.
Gallego also stated that IAG is currently not experiencing any disruptions in jet fuel supply at its key hubs or markets and reassured that fuel availability is secure through the summer period.
Recent data revealed that 120 flights departing from the UK have been canceled this month due to the significant rise in jet fuel prices and concerns over potential shortages. This accounts for a mere 0.53% of the originally scheduled 22,613 departures from UK airports in May.
Looking ahead to June, the number of outbound flights has decreased by 36 compared to the previous week, resulting in a 0.2% reduction in capacity, equating to a loss of 7,972 seats for the month. The final week of May marks a peak holiday period for many, coinciding with school breaks.
Globally, a total of 13,005 flights planned for May were canceled between April 10 and April 21, leading to a 1.5% reduction in capacity, translating to nearly two million fewer available seats.
Industry experts, including Julia Lo Bue-Said from Advantage Travel Partnership and Paul Charles from The PC Agency, highlighted that airlines are proactively evaluating and adjusting flight schedules to mitigate the impact of fuel shortages, ensuring minimal disruption for customers during the upcoming peak travel season.
In response to the escalating fuel crisis, Lufthansa’s airline group announced the cancellation of 20,000 flights over the next six months to conserve fuel. The ongoing tensions in Iran, particularly its control over oil tankers passing through the Strait of Hormuz, have contributed to the spike in oil prices and concerns regarding jet fuel availability.
Despite these challenges, Transport Secretary Heidi Alexander reassured the public that summer holiday plans are unlikely to face significant disruptions. Additional fuel imports from the United States and increased production at refineries have been implemented to alleviate potential shortages. The government has also introduced temporary measures allowing airlines to consolidate passengers from different flights onto fewer planes to optimize fuel consumption.
