The airline group that owns British Airways has announced a multibillion-pound spending spree on dozens of new long-haul aircraft as it shrugged off short-term jitters about traffic volumes between the United States and Europe.
IAG, or International Consolidated Airlines Group, consists of British Airways and two other former state-owned flag carriers, Iberia and Aer Lingus, as well as the Spanish-based budget operations Vueling and Level.
IAG said it had signed a deal to buy 53 new intercontinental aircraft from Boeing and Airbus. Under the contracts it has an option acquire a further 23.
The group runs a fleet of just over 600 aircraft. On Friday it announced that it would be acquiring a further 32 Boeing 787-10 planes, the most expensive commercial aircraft on the market, which at list prices would together cost more than $10 billion.
It also said it would be acquiring 21 Airbus A330-900neo aircraft, which at stated price tags would cost $6 billion, and said it had options to acquire another ten 787s and 13 A330s, which together would nominally cost a further $7 billion.
In reality, bulk-buying of aircraft tends to come with heavy discounts and, with operational problems at both Boeing and Airbus, the actual cost to IAG should be significantly lower.
IAG declined to comment on what it was paying but said it was “very pleased” with the deal.
IAG said: “We are continuing to see good demand for air travel across our core markets”
ALAMY
The orders are due to be delivered from 2029-30, though both aircraft manufacturers have struggled in recent years to fulfil orders on time.
IAG said the orders would bulk up the fleets on its core transatlantic routes, increase the capacity of Level, the group’s Latin America-focused budget long-haul operation, and replace aircraft being operated on costly short-term leases.
The order is not wholly good news for the aircraft engine maker Rolls-Royce. Although it is the sole supplier of engines for the A330, IAG has chosen not to use Rolls-Royce’s troubled Trent 1000 engines for the new 787s and instead plumped for engines from General Electric of the US.
The news came as IAG recorded a near-tripling of first-quarter operating profits, way ahead of City expectations. It is on course, with the bumper summer season ahead, to hit profits of €4.6 billion for the year as a whole.
After weeks of warnings about transatlantic passenger numbers from American carriers and their European counterparts Lufthansa, Air France and KLM, because of the economic uncertainty caused by President Trump’s trade wars, IAG reported that it is seeing no great problem.
“Whilst being mindful of the geopolitical and macroeconomic uncertainty, our outlook for the full year is unchanged,” the FTSE 100 group with a market value of almost £14 billion said in a statement.
“We are continuing to see good demand for air travel across our core markets. Latin America and Europe continue to be strong and the north Atlantic demand has been robust, with strength in our premium cabin mitigating some recent softness in US point-of-sale economy leisure.”
Shares in IAG recovered some of their lost altitude in recent weeks, putting on 7p, or 2.4 per cent, to close at 297¼p on Friday.
The group’s recovery out of the depths of the pandemic lockdowns and travel restrictions took the shares to a five-year high of 366p this year. That was before fears over the economic disruption from protectionist US tariffs sent the stock tumbling by nearly 40 per cent over the space of two months.
In the first three months of 2025, a seasonally tricky first quarter for northern hemisphere carriers, IAG reported a operating profits of €198 million, up from €68 million. That was against an analysts’ consensus forecast of €133 million.
The company said British Airways, which accounts for about half of the group, had enjoyed its best first quarter since it merged with Iberia 14 years ago.
IAG revenues were up nearly 10 per cent at €7 billion on passenger numbers that were marginally down at 26.1 million in the quarter, indicating the continuing levels of airfare inflation in the industry.
With the seasonally strong spring and summer to come, the City believes IAG will hit operating profits of €4.6 billion for the full year, up from €4.2 billion 2024.
That takes into account a £40 million hit that group revealed as the cost of the recent shutdown of Heathrow airport during a power failure. IAG said that was the cost of lost revenues and having to look after stranded passengers. It confirmed that this was unrecoverable from either Heathrow or from insurance.