By Benadeta Mwaura - Reporter
United Kingdom May 08, 2026 - The parent company of British Airways has warned that its annual profits will fall short of expectations as the ongoing Middle East conflict continues to drive up global fuel costs and disrupt aviation markets.
International Airlines Group (IAG), which also owns Iberia and Aer Lingus, said the war, particularly tensions involving Iran, has triggered a sharp increase in jet fuel prices, significantly raising operating costs for airlines worldwide.
The group now expects its fuel bill to climb to about €9 billion in 2026, roughly €2 billion higher than the previous year, a surge that is already weighing on earnings projections.
Despite posting a strong start to the year, with net profit rising sharply in the first quarter, the airline warned that the full impact of the crisis will be felt in the months ahead. In a statement, IAG said, “we expect it to have a more substantial impact throughout the rest of the year as the increase in the fuel cost starts to manifest itself,” adding that profits will be “lower than originally anticipated.”
Chief Executive Luis Gallego acknowledged the uncertainty facing the aviation sector, noting that the company is taking steps to manage rising costs. “We are actively managing the uncertainty created by the fuel price increase and its impact,” he said, while maintaining that there are currently no major disruptions to fuel availability in key markets.
The pressure on airlines stems from a broader global energy shock triggered by the conflict. Oil prices have surged amid fears of supply disruptions, particularly around key routes such as the Strait of Hormuz, a critical artery for global energy shipments.
The war has already doubled the cost of some fuel products and disrupted major air corridors between Europe, Asia and Africa, forcing airlines to reroute flights, increase travel times, and burn more fuel.
For IAG and other carriers, this means higher operational costs, reduced margins, and difficult decisions around capacity and pricing. British Airways is already considering fare increases to offset part of the fuel cost spike, signalling that passengers may ultimately bear some of the burden.
The impact is not limited to one airline. Across Europe, aviation stocks have come under pressure, with investors reacting to weaker profit outlooks and rising uncertainty.
Airlines are responding by: adjusting routes away from conflict zones, cutting or reallocating capacity, as well as increasing ticket prices to protect margins
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Even with fuel hedging strategies, where airlines lock in prices in advance, many carriers remain exposed to sustained volatility in energy markets.
The fallout is already spilling into Africa, particularly East Africa, which is closely linked to global aviation networks.
First, higher ticket prices are likely. Routes connecting Europe to African cities, including Nairobi, could become more expensive as airlines pass on increased fuel costs. This may affect tourism, business travel, and cargo movement.
Second, flight disruptions and rerouting could impact connectivity. With some Middle East airspace affected, airlines are taking longer routes, increasing travel times and operational costs for flights linking Africa to Europe and Asia.
Third, there are broader economic implications. Many African economies rely on aviation for exports such as fresh produce and flowers. Higher freight costs could reduce competitiveness in key markets like the EU.
At the same time, some airlines are already shifting capacity toward stronger routes, including destinations in Africa, as they rebalance networks in response to the crisis.
The warning from IAG highlights a fragile moment for the global aviation industry, which had only recently recovered from the COVID-19 pandemic.
While demand for travel remains strong, especially on long-haul and premium routes, rising fuel costs and geopolitical tensions are now emerging as the biggest risks to profitability.
For Africa, and East Africa in particular, the situation underscores how external shocks can quickly ripple through sectors like tourism, trade, and logistics.
As the conflict continues, airlines, passengers, and economies alike are bracing for a period of higher costs, tighter margins, and continued uncertainty in global air travel.