**IAG posts strong Q1 profit but warns on full-year outlook due to rising fuel costs** IAG, the parent company of British Airways and Iberia, reported a sharp increase in net profit for the first quarter of 2026, but cautioned that soaring kerosene prices and the Middle East conflict will drag down its full-year results. The group posted a net profit after tax of €301 million for the first three months, up about 71% year-on-year. Basic earnings per share rose to €0.065 from €0.037 a year earlier, reflecting a marked improvement in profitability. Revenue reached just over €7.1 billion, up about 2%, with passenger revenue exceeding €6.2 billion, driven by sustained demand on key European and transatlantic routes. Operating profit hit €351 million, a more than 70% increase year-on-year. **Outperforming rivals** Compared to its major European competitors, IAG performed significantly better. Air France-KLM posted a slightly negative operating result of –€27 million for Q1 (with variations depending on the scope, up to about –€90 million), while Lufthansa Group recorded a larger operating loss of –€612 million (adjusted result), despite strong activity. IAG thus stands out as the only one of the three legacy European groups to report a positive and significant quarterly net profit (+€301 million), even as all face rising kerosene prices and geopolitical volatility. **Profit warning for 2026** Despite these strong numbers, IAG issued a warning on its full-year 2026 outlook. The group said its annual profit is now expected to be "lower than we initially anticipated." Management directly blamed higher fuel costs, a consequence of the Middle East war and kerosene supply tensions. No new profit target was provided, only a signal that the trajectory is less favorable than hoped. "We expect the conflict to have a greater impact on the rest of the year, as the rise in fuel costs takes effect," the group explained. According to Spanish economic press, IAG estimates an additional fuel cost of around €2 billion for the year, despite hedging covering nearly 70% of its exposure. **Demand remains solid** Despite the headwinds, travel demand remains strong, particularly in the leisure and business markets served by British Airways, Iberia, Vueling, Level, and Aer Lingus. IAG noted that it already significantly improved its results in 2025, with annual profit up nearly a quarter thanks to the previous decline in fuel costs. The group says it remains "confident in the strength of demand" and in its ability to adjust seat capacity and pricing. "Our first-quarter results demonstrate the resilience of our model and the quality of our brands, even in a more volatile environment," IAG stressed. For 2026, the key question is not commercial activity but energy costs, now central to the profitability equations of European airlines.