British Airways’ parent company is anticipating a significant impact on its profits due to an unexpected increase in fuel costs this year, estimating an additional expenditure of about two billion euros (£1.72 billion) amid the Iran oil crisis.
The chief executive of International Airlines Group (IAG), Luis Gallego, stated that they are actively managing the uncertainty caused by the surge in fuel prices by implementing necessary measures on yields, costs, and capacity. Despite the expected decrease in profits for the year, Gallego expressed confidence in the company’s business model and strategy.
Gallego reassured that IAG is not currently experiencing any disruptions in jet fuel supply at their main hubs or markets and remains optimistic about fuel availability throughout the summer.
Recent data revealed that 120 flights from the UK have been canceled this month as a result of soaring jet fuel prices and concerns about potential shortages. Airlines have scrapped 120 out of the 22,613 scheduled departures from UK airports in May, representing a 0.53% reduction.
Looking ahead to June, there has been a slight decline in outbound flights compared to the previous week, resulting in a 0.2% reduction in capacity with 7,972 fewer seats available for the month. This adjustment coincides with the peak holiday season at the end of May.
Globally, approximately 13,005 flights planned for May were canceled between April 10 and April 21, leading to a capacity decrease of nearly two million seats.
Julia Lo Bue-Said, the CEO of Advantage Travel Partnership, mentioned that airlines are evaluating underperforming flights and making necessary adjustments such as consolidation or cancellations. She assured that departures from the UK to popular summer destinations remain unaffected, encouraging customers to book with confidence.
Paul Charles, the founder of travel consultancy The PC Agency, highlighted the proactive approach taken by airlines in cutting flights well in advance to minimize passenger inconvenience amidst the ongoing Iran conflict and fuel supply challenges.
In a similar effort to save fuel, Lufthansa’s airline group announced the cancellation of 20,000 flights over the next six months in response to the escalating oil prices and concerns over jet fuel shortages caused by Iran’s actions in the Strait of Hormuz.
Transport Secretary Heidi Alexander provided reassurance that summer travel plans will not be significantly disrupted due to increased fuel imports from America and enhanced refinery production. Additionally, the government has implemented a temporary rule change allowing airlines to combine passengers from different flights onto fewer planes to conserve fuel.