International Airlines Group (IAG), the owner of British Airways, has seen a significant increase in its annual profits, rising by 20% to nearly £4 billion, even as the number of passengers dipped slightly by 0.4% in 2025. The airline's pre-tax profits reached €4.5 billion (£3.9 billion), showcasing record operating margins exceeding 15%, primarily driven by strong performance from British Airways and its sister airline Iberia. The group’s CEO, Luis Gallego, highlighted the robust transatlantic market served by IAG’s other airlines, Aer Lingus and Level, despite prior warnings of potentially softer demand in the autumn months.

Additionally, while overall passenger numbers have slightly declined, premium leisure bookings for routes to North America have held up well, suggesting a resilient demand for these services. Gallego's remarks during an investor call indicated optimism for the upcoming travel year, particularly for the lucrative North American routes in 2026. However, he also raised concerns regarding the ambitious plans for a third runway at Heathrow Airport, which has government support and estimated costs of around £49 billion including expansion costs, hinting at potential implications for the industry as a whole.

The results underline the ongoing profitability of British Airways within the competitive global airline market, despite challenges such as changing consumer behaviors and economic pressures. The positive financial performance of IAG signals not only recovery from pandemic-induced travel restrictions but also suggests a shift in the premium travel sector, emphasizing the importance of strategic navigation through infrastructure developments like the Heathrow expansion. Gallego's leadership continues to focus on maximizing profits while addressing operational expansions and maintaining service quality, which will be critical as the industry evolves post-pandemic.