Finance
British Airways owner IAG beats profit estimates on premium demand
Published by Global Banking & Finance Review®
Posted on February 27, 2026
2 min readLast updated: February 27, 2026
By Joanna Plucinska and Raechel Thankam Job
Feb 27 (Reuters) - British Airways owner IAG reported better-than-expected annual profit on Friday, helped by lower fuel costs and solid demand on core transatlantic routes and in premium cabins, sending shares up about 1% in early trade.
European airlines have been buoyed by strong premium demand across the North Atlantic, a sector-wide trend in which affluent travellers continue to spend even as U.S. demand for economy fares softened.
IAG has been a European leader in recent years thanks to strengthened transatlantic links in North and South America.
But price-sensitive travellers have pulled back amid tariff-related uncertainty and shifting U.S. demand signals. The group warned in November of weakness in the economy segment of the transatlantic market, sending its share price lower.
"Since Q3 we have seen a rebound," Chief Executive Luis Gallego told a media call, adding that premium and corporate demand were performing particularly well at British Airways and that bookings for the first quarter of 2026 were strong.
The shares have since recovered, but IAG has lost top spot for share-price growth to Air France-KLM, whose shares have jumped by 21.4% over the past three months.
Other European carriers are also benefiting from robust demand at the top end of the market, with Lufthansa rolling out new premium seats and Air France-KLM enhancing premium products through upgraded cabins, lounges and onboard services.
IAG reported operating profit before exceptional items of 5.02 billion euros ($5.93 billion), slightly ahead of the 4.97 billion euros forecast by analysts polled by LSEG and up 13% year on year.
The company said on Thursday it would return 1.5 billion euros to shareholders over the next 12 months, starting with a 500 million euro share buyback to be completed by the end of May.
It added that it expected capacity growth of around 3%, with no delivery delays projected from planemakers Airbus and Boeing.
($1 = 0.8462 euros)
(Reporting by Joanna Plucinska in London and Raechel Thankam Job in Bengaluru. Editing by David Goodman and Mark Potter)
