British Airways owner hit by fuel costs and up to £25m air traffic chaos bill

The owner of British Airways has revealed a profits hit from soaring fuel costs and a bill of up to 30 million euros (£24.6 million) from recent air traffic control outages.

International Airlines Group (IAG) estimated the National Air Traffic Services incident on September 8 cost it between 25 million euros (£20.5 million) and 30 million euros (£24.6 million) in its third quarter, with 500 of its flights and 85,000 customers impacted.

Earlier this week the Cyber Monitoring Centre calculated the outage cost to the UK economy alone was around £33 million, with a financial toll being taken on airlines, airports, ground operators and tour operators of flight cancellations, delays and diversions.

More than 2,000 flights were cancelled across the sector and hundreds of thousands of passengers saw their travel plans disrupted.

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IAG – which also owns Iberia and Vueling among other airlines – said earnings were knocked by the incident, as well as a 30.4% jump in jet fuel costs, rising by 570 million euros (£471.9 million) in the quarter.

It saw pre-tax profits fall 12.9% to 1.63 billion euros (£1.33 billion) in the three months to September 30, while operating profits slumped 15.9% to 1.73 billion euros (£1.42 billion).

IAG’s results also come after more flight chaos this week caused by bomb threats, with a number of flights diverted across Europe following a series of hoaxes.

Luis Gallego, chief executive of IAG, said the group had followed strict protocols put in place by authorities and had to take every threat seriously.

He said: “It’s easy to create a threat – with an email or a phone call you can create a problem.

“We have to take seriously each threat to comply with protocols.

“We are working always with the authorities to see the best way to address this but we always want to be prudent on these issues.

“We cannot do anything else.”

IAG’s trading update showed a 4.5% rise in revenues was not enough to offset the higher costs in the quarter, with efforts to make efficiencies and increase fares only partly mitigating some of the impact.

IAG said it was now expecting its fuel costs for the full year to soar to 8.9 billion euros (£7.28 billion), even with actions to fix fuel prices in advance.

It said ongoing efforts to drive savings were helping limit the impact of disruption and other costs.

Across British Airways, it said it was hoping to “pass through” close to 100% of higher fuel costs over the full year, but declined to give details on how much fares were rising or the outlook for prices going forwards.

It said only that it was proactively managing capacity to focus on profitable flying in the traditionally quieter final quarter of the year.

Mr Gallego said: “As a result of the actions we are taking, the outlook for the rest of the year, as well as the start of next year, is positive.”

Earlier this week, Ryanair said it was considering pay freezes and increased use of AI to help offset a surge in fuel costs next year and warned over a double-digit rise in fares next year across Europe.