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British Airways’ owner, International Airlines Group, has announced a sharp rise in annual profits to almost £4bn despite a slight fall in passenger numbers in 2025.
Pre-tax profits across IAG increased by 20% to €4.5bn (£3.9bn), with record operating profits on margins of more than 15% at BA and its sister airline Iberia.
The group’s chief executive, Luis Gallego, said the lucrative transatlantic market, also served by IAG’s Aer Lingus and Level airlines, remained robust, after warnings of softening demand in the autumn.
Passenger numbers fell 0.4% overall but Gallego told an investor call that premium leisure bookings on the North American routes for 2026 were doing “very well”.
BA, the main contributor to IAG’s profits, operates about half of all flights out of Heathrow. Gallego issued a warning over Heathrow’s third runway plans, which have been backed by the government and are expected to cost a total of £49bn with associated expansion costs.
He said IAG “supports this commitment to growth but the cost must be far lower to ensure that Heathrow remains globally competitive”.
In comments to investors, Gallego added: “We need to look at the facts and the facts are that Heathrow is the most expensive airport in the world. You need to pay two or three times more than what you have to pay in other big European hubs. We think that if that plan goes ahead, the passengers are going to pay double of what they are paying today.
“So we have done our internal analysis of the maximum level of investment we think, with the right phasing, we can afford in order to have flat fares for the passenger. And £30bn is our number. We can be wrong, but that’s a reduction of 40% in the investment.”
Gallego said if Heathrow ensured it capped charges, and did not increase what airlines were already paying, then IAG would “support any project”.
For IAG, he said 2025 had been “another year of exceptional performance”, with improved punctuality and customer satisfaction. He added: “Looking ahead, demand is strong, with research and market data indicating that travellers in our core markets within Europe and across the Atlantic remain committed to flying the same or more in 2026.”
IAG expects to raise its capacity by about 3% this year. The group achieved record operating profits as well as growing revenue by 3.5% and would be passing returns to shareholders, with a total dividend for 2025 of €448m, Gallego said.
IAG announced a further €1.5bn (£1.1bn) share buyback, after a €1bn buyback announced in February.
IAG, which also owns the Spanish airline Vueling, carried a total of 121.6 million passengers in 2025, down 0.4% from 122 million in 2024.
Despite the strong financial results, IAG’s share price slipped about 6% on Friday. Gallego said the dip in passenger numbers was affecting all airlines and was partly because of concerns about tensions between the US and Iran – which have grown, with the US on Friday saying non-essential staff at its embassy in Israel could leave – and potential for higher fuel prices.
Andrew Lobbenberg, an analyst at Barclays, said US-Iran tensions were an immediate cause, but also a sense that IAG’s post-Covid boom may have peaked, with the company performing above its cyclical financial targets.
He added that an investment strategy laid out in a presentation to analysts showed “large-scale, climbing capital expenditure plans ahead, right out to the 2030s. While this supports badly needed fleet renewal, it means that future cash generation and hence shareholder returns are likely to fall.”
