IAG lifts fuel bill outlook to €8.9 billion, keeps payouts flowing

Fuel outlook and hedging

IAG lifted its fuel spend forecast to €8.9 billion for the year, compared with a previous estimate of €8.6 billion, and said it sees prices staying high into 2027. The group said it is almost 71% hedged for this year and 45% for 2027, helping cushion volatility even as costs rise.

Chief Financial Officer Jose Antonio Barrionuevo summed it up on a media call: "We're going to face a higher fuel situation on a net basis at the end of the year, and we'll have to continue managing that."

Results and the market's take

For the three months to September, operating profit before exceptional items came in at €1.72 billion, a 16% decline from the same period last year. Shares slid almost 4% at the London open, then clawed back part of the loss.

Chief Executive Officer Luis Gallego said, "Demand continues very resilient across the group," adding, "The pricing is still very high and we see that across all the key markets."

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Payouts and capacity

Despite a bigger fuel bill, including higher costs tied to the Middle East war, IAG plans to keep shareholder returns coming. It announced an interim dividend of €0.053 per share, 10% above last year, and began the final €500 million tranche of its €1.5 billion share repurchase, which it expects to finish in February.

The company also now expects a slight full-year capacity decline, shifting from an unchanged outlook given in July.

Industry backdrop and why it matters for your portfolio

Airlines globally have trimmed winter schedules, lowered earnings guidance, and pushed cost cuts as jet fuel bites. IAG was the last of the big European players to post quarterly numbers, after Deutsche Lufthansa, Air France-KLM, and Ryanair, which each pointed to higher fares next year.

In plain English: stubborn fuel and firm pricing can support revenue but squeeze margins. Watch how much of IAG's higher bill gets offset by hedging and fares, and whether its dividend and buyback pace holds as costs stay elevated into 2027.

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