IAG Profits Soar on Premium Travel, CEO Clashes with Heathrow Over Runway Cost

International Airlines Group, the parent company of British Airways, Iberia, and other carriers, posted a €4.5 billion pre-tax profit for 2025, a 20% jump from the previous year. This financial strength came even as the group carried slightly fewer passengers, a dip of 0.4%.

The results were powered by robust demand, especially for premium seats on lucrative transatlantic routes. IAG CEO Luis Gallego told investors that bookings for 2026 on these North American services are performing "very well." The company's operating margin exceeded 15% at its flagship airlines, BA and Iberia.

Gallego used the earnings call to issue a stark warning about Heathrow Airport's proposed third runway, a £49 billion project backed by the government. He called Heathrow "the most expensive airport in the world" and argued the expansion plan's cost must be slashed by 40% to about £30 billion to keep fares stable and the hub competitive.

"If that plan goes ahead, the passengers are going to pay double of what they are paying today," Gallego stated. He pledged IAG's support only if the airport caps charges for airlines.

Despite the strong profit, IAG's share price fell roughly 6% on Friday. Analysts pointed to broader industry concerns, including geopolitical tensions and higher fuel prices, alongside a view that the airline's post-pandemic financial boom may be reaching its peak. The company announced a €448 million dividend and a further €1.5 billion share buyback, even as it signaled significant future spending on fleet renewal into the next decade.