Heathrow's shutdown results in £40 million loss for British Airways' parent company
International Airlines Group (IAG) has reported strong financial results for the first half of 2025, despite facing significant operational hurdles due to the closure of Heathrow Airport and other geopolitical disruptions.
The Heathrow closure on March 21, 2025, and subsequent disruptions had a severe short-term impact on IAG's operations. However, the group managed to increase flight capacity slightly (+2.1%) and benefit from higher passenger revenues, particularly in premium cabins and North Atlantic markets led by British Airways.
IAG's revenue grew 8.0% to €15.9 billion, and operating profit before exceptional items surged 43.5% to €1.88 billion. The operating margin improved to 11.8%, driven by strong travel demand and successful transformation initiatives.
The group also maintained significant free cash flow and announced €1.5 billion in shareholder returns during 2025. The board acknowledged the difficulties but remained confident about continuing operational liquidity and margin improvement throughout the year.
IAG's leadership, led by boss Luis Gallego, remains focused on their market-leading brands and core geographies. The group, which owns Spanish carrier Vueling and Ireland's Aer Lingus, in addition to British Airways, plans to invest in its fleet due to robust performance in their key markets.
However, IAG's carriers are still not operating flights to and from Tel Aviv, and no new information about this was provided. Additionally, no new information about the impact of air strikes between Israel and the US and Iran on IAG's operations was provided in this report.
In June, airlines across the world were forced to cancel and reroute flights due to these air strikes. At the height of the tensions, IAG briefly stopped flights to destinations in the Gulf.
Despite the challenges, Heathrow's Terminal 5, entirely devoted to journeys with British Airways, continues to play a crucial role in IAG's operations. Over 820 British Airways flights pass through Heathrow airport every day.
The new capacity growth projection is roughly 2.5%, down from the previous 3% estimate for the year. IAG cut its projection for capacity growth for the rest of the year due to concerns around air traffic control and aircraft reliability, particularly in the aftermath of the Heathrow disruption.
Despite the setbacks, IAG's interim results for the first half of 2025 were better than expected, with the share price rebounding from its post-Heathrow disruption lows. The group's resilience in the face of operational challenges bodes well for its future performance.
[1] IAG's Interim Results for the six months ended 30 June 2025: https://www.iag.com/media/news-and-media/press-releases/2025/iag-announces-interim-results-for-the-six-months-ended-30-june-2025 [2] IAG's Half Year Results 2025 Presentation: https://www.iag.com/media/news-and-media/presentations/half-year-results-2025 [3] IAG's Half Year Results 2025 Q&A: https://www.iag.com/media/news-and-media/presentations/half-year-results-2025-qa [4] IAG's Half Year Results 2025 Analyst Presentation: https://www.iag.com/media/news-and-media/presentations/half-year-results-2025-analyst-presentation
- Being influenced by the strong travel demand and increased flight capacity, especially in premium cabins and North Atlantic markets, IAG's lifestyle and business strategies have been dynamically adjusted to accommodate the growing markets in the travel sector.
- Despite the geopolitical disruptions and airport closures, such as Heathrow Airport, international travel remains a significant aspect of IAG's operations, with the group planning to invest in its transport infrastructure to support its expanding markets and market-leading brands.
