International Airlines Group posted a 34 percent drop in second-quarter pre-tax profit to 995 million euros as a 23 percent surge in fuel and emissions costs ate into margins, underscoring how quickly geopolitical risk can rewrite an airline's earnings story.
The fuel bill tells the story
The 413 million euro increase in combined fuel and emissions charges, linked by the company to the Middle East conflict, arrived while revenue held flat at 8.9 billion euros. Operating profit fell 25 percent to 1.3 billion euros. The math is unforgiving: every euro of top-line stability was more than offset by the cost of keeping jets in the air.
The half-year view softens the blow
Zoom out to the first six months and the picture looks less dramatic. Pre-tax profit declined 19 percent to 1.4 billion euros on revenue that actually rose 1 percent to 16.1 billion euros. Passenger volumes of 57.9 million were virtually unchanged from 2025. The group's diverse portfolio of British Airways, Iberia, Vueling and Level absorbed the shock better than a single-brand carrier could.
Analysts see resilience others missed
Hargreaves Lansdown equity analyst Aarin Chiekrie noted profits came in above market expectations despite the headline decline, crediting tight cost control and a fuel bill that came in lower than forecasters had feared. The market had priced in worse; IAG delivered merely bad.
What to watch in the second half
Forward bookings cover 57 percent of second-half seats at revenue levels matching last year. Long-haul demand remains positive, short-haul competitive. Chief executive Luis Gallego insists the group's transformation program built the resilience now on display. The test is whether fuel costs stabilize or whether the Middle East conflict adds another chapter to the cost story.