IAG, which also owns Aer Lingus, expects its fuel costs to rise to around €9 billion this year, which chief executive Luis Gallego on Friday (8 May) said would be about €2 billion higher than last year. IAG is 70% hedged on fuel for the remainder of the year.
The group said price rather than availability of fuel would be the biggest issue. "Given the strength of our supply chain and inventory, in particular the self-supply arrangements we have invested in at our main hubs, based on what we know today we are confident of jet fuel supply in our main markets throughout the summer.
"Today the situation is more about the price of fuel than the availability. If the current conflict continues to restrict flows of both crude oil and jet fuel from the Middle East, there is the potential for supplies of jet fuel to be restricted on a global basis."
IAG said that while its first quarter (three months to the end of March) was "relatively unaffected" by the conflict in the Middle East, it expected "a more substantial impact throughout the rest of the year as the increase in the fuel cost starts to manifest itself".
It is forecasting a dip in full-year profit as a result, and for capacity growth to come in around 3% lower than it previously forecast. "The impact of the higher fuel price will inevitably lead to lower profit this year than we originally anticipated," said Gallego.
The group's operating profit increased by 77% year-on-year during Q1 to €351 million on a 1.9% increase in revenue to nearly €7.2 billion. This resulted in a post-tax profit of €301 million for the first quarter, up from €176 million this time last year (+71%).
