British Airways owner IAG reports record profits as demand for ‘premium’ travel rises

International Airlines Group (IAG) has reported record profits as it benefited from lower fuel prices and growing demand for its premium services.

The British Airways owner saw operating profit grow 17.3 per cent to €5billion (£4.38bn) on revenue of €33billion (£28.9bn) in 2025.

It said its ‘exceptional’ performance had been driven by lower fuel prices and continued demand for its core transatlantic routes, even as sales of US-sold economy fares fell.

There had been concern that while European airlines had managed to dodge turmoil over tariffs last year, IAG would be more affected by the potential impact on travel to the US.

While IAG reported some weakness in the first half of the year linked to the uncertainty of US tariffs, trading was ‘robust’ throughout the year, particularly in its premium cabins.

While economy flyers have pulled back, airlines are doubling down on their premium offering amid growing demand. 

Lufthansa has introduced new premium seats while Air France has upgraded its cabins, lounges and onboard services.

IAG said British Airways, which is rebuilding its premium capacity to pre-pandemic levels, will have more ‘high-premium-capacity aircraft’ in the coming years.

IAG’s margins of 15.1 per cent are now at the top of its range, which it said were ‘significantly better than those of our global competitors’. Iberia delivered a 16.2 per cent margin, with British Airways not far behind at 15.2 per cent.

It said it had continued to grow other revenue streams, including in the Iberia maintenance, repair and overhaul business, and in IAG Loyalty, which includes British Airways Holidays.

Available seat kilometres – a measure of its capacity – grew by 2.4 per cent last year, led by Aer Lingus increasing capacity at 6.6 per cent. At British Airways, which accounts for around 45 per cent of the group’s profits, it was broadly flat.

Looking ahead, it expects capacity to increase 3 per cent as the outlook for travel trends ‘continues to be supportive, particularly in our core markets’.

The airline group said it would deliver a €1.5 billion share buyback this year, and a final dividend of €0.05 per share (€228 million in total). It brings the total amount of excess cash returns to €2.85 billion in the last three years.

Shares in IAG dipped 1 per cent to 452.3p this morning.