IAG profits surge to nearly £4bn as British Airways warns on Heathrow expansion costs
On Friday, British Airways’ parent company reported a sharp rise in annual profits, despite carrying slightly fewer passengers over the past year, underlining the strength of premium transatlantic demand.
International Airlines Group said pre-tax profits rose 20% to €4.5bn, equivalent to almost £4bn, with operating margins exceeding 15% at both British Airways and Iberia. The group attributed the performance to resilient long-haul travel, particularly across the North Atlantic, even as passenger numbers dipped marginally.
More UK and London reporting from EyeOnLondon
Business shifts, City finance and policy developments shaping the capital.
ATS Euromaster UK operations wind down
The tyre and vehicle services company confirms changes to its UK footprint, raising questions over jobs and restructuring.
Read the full reportPikachu Illustrator card sale sets new benchmark
A rare Pokémon card achieves a landmark price, underscoring the continued strength of the high-end collectibles market.
Read the full reportLocal levies should fund councils, say London leaders
A new proposal argues that greater control over locally raised taxes would strengthen council finances and long-term planning.
Read the full reportAcross the group, total passenger numbers fell by 0.4% to 121.6 million in 2025. Yet Luis Gallego, IAG’s chief executive, told investors that premium leisure bookings for North American routes in 2026 were performing “very well”, suggesting that higher-yield passengers continue to drive profitability.
British Airways remains the principal contributor to earnings and operates roughly half of all flights from Heathrow. Against that backdrop, Gallego issued a caution over the proposed third runway at Heathrow, which has government backing under the UK’s long-term aviation strategy set out by the Department for Transport (Aviation 2050: The Future of UK Aviation). While expressing support for growth, he warned that the financial burden must be contained to preserve the airport’s competitiveness.
While expressing support for growth, he warned that the financial burden must be contained to preserve the airport’s competitiveness. “We support this commitment to growth,” he said, “but the cost must be far lower to ensure that Heathrow remains globally competitive.”
IAG described 2025 as another year of strong operational performance, citing improved punctuality and customer satisfaction. Revenue increased by 3.5% and capacity is expected to rise by around 3% in the year ahead.
The group confirmed it would return cash to shareholders, announcing a total dividend of €448m for 2025 and a further €1.5bn share buyback programme. This follows a €1bn buyback unveiled earlier in the year.
Despite the upbeat results, IAG shares fell by about 6% in early trading on Friday.
The figures suggest that, although overall passenger growth has plateaued, demand in core European and transatlantic markets remains robust. For UK aviation policy, the results sharpen the debate over Heathrow’s expansion: airlines are profitable, but wary of cost escalation that could affect fares and competitiveness.
For continued reporting on Heathrow expansion, UK aviation policy and the future of long-haul travel from London, follow EyeOnLondon.
[Image credit | British Airways Media]
Follow us on:
Subscribe to our YouTube channel for the latest videos and updates!
We value your thoughts! Share your feedback and help us make EyeOnLondon even better!
