International Airlines Group Places Large Order for New Wide-Bodied Planes
In a significant bet on the continued strong demand for long-haul flying, International Airlines Group (IAG), the owner of British Airways, has ordered 53 new wide-bodied planes from Boeing and Airbus. The deal, announced on Friday, is a major boost to the airline industry, which has faced uncertainty in recent months due to macroeconomic concerns and trade tensions.
According to a report by the Financial Times, IAG has ordered 32 Boeing 787-10 aircraft for British Airways and 21 Airbus A330-900neo aircraft, which will be flown by Aer Lingus, Iberia, or Level. The airline group said the new planes will enable it to replace 35 of its older planes and increase the size of its long-haul fleet by 18 aircraft.
The deal was welcomed by US Commerce Secretary Howard Lutnick on Thursday, as the US and UK announced a trade agreement. The order is a significant vote of confidence in the airline industry, which has faced challenges in recent months due to rising fuel costs and macroeconomic uncertainty. As the Financial Times reports, IAG’s decision to invest in new planes is a sign that the airline industry remains optimistic about the future of long-haul flying.
IAG reported operating profit of €198mn for the first three months of the year, up from €68mn a year ago, boosted by higher passenger revenues and lower fuel costs. However, the airline group warned of "some recent softness" in economy tickets bought by holidaymakers in the US. The company has reported a series of record annual profits since the pandemic, built on high demand for long-haul flying, particularly across the Atlantic and in business and first class.
The aircraft orders announced on Friday include options to buy up to 10 more Boeing 787 aircraft, and up to 13 additional Airbus A330s. The Boeing aircraft will be powered by General Electric engines and the Airbus planes by Rolls-Royce. Luis Gallego, IAG chief executive, said: "Looking ahead to the next decade, these new aircraft will enable us to strengthen our core markets and further improve our customer experience."
The airline group has faced questions from analysts and investors over the strength of the transatlantic market following the uncertainty caused by US President Donald Trump’s trade war and concerns that travellers will be put off by more hostile US border patrols. However, Gallego said that bookings remained "resilient . . . across all our markets", particularly in business and first class. The airline group said strong sales in its premium cabins had mitigated the challenges in securing economy bookings from US holidaymakers.
As the Financial Times notes, several other airlines, including Air France, Lufthansa, and Virgin Atlantic, have warned of similar signs of cracks in demand across the Atlantic, while saying that overall Trump’s policies had not yet had a material impact on demand for flying. Despite these challenges, IAG remains optimistic about the future of long-haul flying and is investing heavily in new planes to meet growing demand.
The day-long closure of Heathrow airport in March due to a power cut had cost BA about £40mn, IAG said. However, the airline group remains confident that its investment in new planes will pay off in the long term. As the Financial Times reports, IAG’s decision to order 53 new wide-bodied planes is a significant bet on the continued growth of the airline industry.
