The International Airlines Group (IAG), the parent company of British Airways, has made a significant move in the aviation industry by announcing an order for 53 new long-haul aircraft. This decision, revealed on May 9, 2025, comes on the heels of better-than-expected financial results for the first quarter of the year.
The new order includes 32 Boeing 787-10 aircraft specifically for British Airways and 21 Airbus A330-900neo aircraft, which may be allocated to other IAG airlines such as Aer Lingus, Iberia, and LEVEL. This strategic expansion of the fleet is aimed at enhancing IAG's long-haul capabilities and is expected to deliver between 2028 and 2033, pending shareholder approval.
In addition to this latest order, IAG had already placed an order for 18 aircraft in March 2025. This earlier order consisted of six Airbus A350-900s for Iberia, six Airbus A350-1000s, and six Boeing 777-9s for British Airways. The total investment reflects IAG's commitment to modernizing its fleet and meeting the growing demand for air travel.
According to IAG, the list prices for the A330-900neo and 787-10 aircraft are approximately $374 million and $397 million, respectively, based on January 2025 U.S. dollar terms. However, it is common for airlines to negotiate substantial discounts on these prices, and IAG did not disclose the specifics of its negotiations.
Further solidifying its position in the market, British Airways has secured options to purchase up to 10 additional Boeing 787s. Additionally, under its agreement with Airbus, IAG holds purchase rights for up to 13 more A330-900neos, providing the company with flexibility in its fleet expansion strategy.
The announcement of these aircraft orders coincided with a broader context of international trade relations. On May 8, 2025, the United States government announced that Britain would purchase $10 billion worth of Boeing jets, indicating a strengthening of trade ties between the two nations. Industry sources suggest that IAG's order will also include around 30 jets from Airbus, further splitting its wide-body order between the European manufacturer and its U.S. counterpart.
Boeing has been facing challenges in ramping up production, particularly of its 737 MAX jet, which is its best-selling model. The company aims to increase production to 38 jets per month this year following a difficult 2024 marked by quality issues that led to the replacement of its CEO. Despite these challenges, IAG's latest order adds to an already significant backlog of 149 Boeing planes scheduled for UK purchasers, as reported by Boeing's published backlog.
In financial terms, IAG reported a 9.6% increase in revenue for the first quarter of 2025, reaching €7 billion (£5.94 billion), up from €6.4 billion in the same period last year. Operating profit more than doubled from €68 million to €198 million, while the company's profit after tax swung from a €4 million loss last year to a €176 million profit this year. IAG attributed this surge in profitability to strong revenue growth and lower fuel prices, which helped offset expected cost increases, leading to an operating margin increase to 2.8%.
Chief Executive Luis Gallego commented on the results, stating that the company has seen resilient demand for air travel across its core markets, which include the North Atlantic, Latin America, and intra-Europe. He emphasized, "Our strong first-quarter results reflect the performance of our businesses and the effectiveness of our strategy and transformation. We continue to deliver on our industry-leading financial targets." This sentiment was echoed by Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, who noted that IAG's strong networks and brands are driving performance despite pressures on consumer incomes.
In the wake of these announcements, analysts have reacted positively. Gerald Khoo, a research analyst at Panmure Gordon, reiterated his ‘Buy’ rating for IAG shares, setting a price target of 500p. Khoo highlighted that IAG's current price-to-earnings ratio of 5.2x is attractive, despite the recent recovery in share prices. He suggested that fears regarding the impact of U.S. tariffs on air travel demand may be overstated given the robust overall demand and strength in premium cabin sales.
While IAG has faced some recent softness in economy ticket sales, particularly among U.S. holidaymakers, the company has reported strength in premium tickets, which has helped mitigate potential losses. Gallego stated that the airline continues to see strong demand for air travel, especially in premium cabins, despite ongoing macroeconomic uncertainties.
As IAG moves forward with its expansion plans, the aviation industry is closely monitoring how these developments will impact the competitive landscape and the broader market dynamics. The recent trade deal between the U.S. and the UK, which saw significant reductions in tariffs on British goods, including aircraft parts, is expected to foster a more favorable environment for future aircraft orders and collaborations.
In summary, IAG's substantial order for new aircraft not only signifies a bold step in enhancing its fleet capabilities but also reflects the company's strong financial performance and strategic positioning in a recovering air travel market. With increasing demand and a commitment to modernizing its operations, IAG appears well-prepared to navigate the challenges and opportunities that lie ahead in the aviation sector.
