- IAG has cut its 2026 capacity growth to flat from a previous target of under 3pc.
- The decision was driven by cancellations to the Middle East and a focus on margins.
- Operating profit dropped from €1.87bn to €1.75bn in H1 2026.
- Aer Lingus faces intense competition with 40-50pc capacity increases from rivals.
- The airline is implementing cost reductions and targeting a 15pc operating margin.
International Airlines Group has been cutting back on capacity growth as it deals with a steep rise in fuel costs for the foreseeable future. The company, which is the parent of Aer Lingus, British Airways, Iberia and Vueling, will keep capacity flat for the full year 2026. CEO Luis Gallego announced the decision on 31 July during the company’s first-half results presentation to analysts, a revision from the “less than 3pc” growth in available seat kilometres envisaged in April.
Gallego explained the main reason for the cutbacks was that IAG airlines have cancelled a large part of their operation to the Middle East, with flights only resuming slowly. British Airways is planned to resume flights to Doha, Qatar, on 1 September and Riyadh, Saudi-Arabia, on 1 October. Some of the Middle East capacity has been redeployed to other destinations, with British Airways adding frequencies to Bengaluru, India, and Nairobi, Kenya. The company also made other reductions for “capacity discipline” to preserve margins.
IAG saw its operating profit for the first half of 2026 drop from €1.87bn to €1.75bn, as the group digested a €676m increase in fuel costs. Passenger revenues increased by €828m in the same period. Aer Lingus is facing a structurally changed environment, with competitors increasing capacity by 40pc in short-haul and 50pc in long-haul. The airline is implementing a severe cost-reduction programme and has taken the weakest flying out of the network.
Luis Gallego shared: “We are always analysing opportunities of consolidation across the sector.”
