International Airlines Group (IAG) has stated that it is confident in its jet fuel supply in its main markets throughout the summer, despite the impact of the Middle East conflict.

The group, which owns airlines including British Airways and Aer Lingus, said that while there is potential for jet fuel to be restricted on a global basis, it is "well hedged" at 70% for the rest of the year. Furthermore, it boasted a strong supply chain and inventory.

In its Q1 update, IAG recorded a 1.9% year-on-year revenue increase, totalling €7.1bn, which it said reflected strong demand for its network and brands.

Furthermore, its operating profit jumped by 77% to €351m, driven by revenue growth and to date limited impact on cost from the Middle East conflict.

Its profit after tax also increased by 71% to €301m.

Chief executive officer at IAG, Luis Gallego, said: "IAG is uniquely positioned to navigate the current headwinds created by the Middle East conflict thanks to our leading positions across diverse markets, strong brands, structurally high margins and strong balance sheet, as well as a strong track record of execution.

"We are actively managing the uncertainty created by the fuel price increase and its impact, taking the necessary action on yields, costs and capacity. We currently see no issues with fuel availability in our main markets, particularly as we benefit from our investment in fuel self-supply at our hubs."

In its outlook, IAG said that demand for travel continues to be robust and it has seen "resilient booked revenue" for the second quarter at 80%, which is in line with historical levels.

It added that while the first quarter was relatively unaffected by the Middle East conflict, this is set to have a more substantial impact throughout the rest of the year as fuel costs start to increase.

As a result, IAG expects its profit to be lower than originally anticipated at the start of the year.

Following the Q1 update, shares in IAG dropped by over 1%.

Investment director at AJ Bell, Russ Mould said that the update has provided some "words of encouragement" for investors and holidaymakers.

He concluded: "IAG avoiding widespread cancellations in a period clouded by fears of fuel shortages could help it to stand out from the crowd. Other airlines won’t be so lucky.

"Keeping customers on side is much more important during a crisis than making big money, as it can help build long-lasting trust. There are no guarantees that IAG will be able to stick to its scheduled flights post-summer. It flags the potential for jet fuel to be restricted on a global basis if the conflict lingers on.

"Months of further disruption to the flow of crude oil and jet fuel from the Middle East could severely damage the airline industry. Like the pandemic, operators’ hands would be tied, and they might not be able to fly as freely as they would like. Airlines are taking it one week at a time, and as it stands today, IAG is keeping its chin up in the face of uncertainty."

---