LONDON, March 5, 2026, 09:05 GMT
International Consolidated Airlines Group (IAG) shares clawed back 2% on Wednesday, following a steep 13% drop across the last three sessions. Middle East airspace closures have disrupted travelers and forced airlines to reroute flights around the Gulf.
Carriers are scrambling to tweak long-haul routes—taking on more fuel, adding refuelling stops. The shakeup is pushing up costs and squeezing schedules, reaching even airlines outside the region.
Oil is the pressure point right now. “There are important differences across carriers in terms of hedging strategy, air cargo exposure, and network rerouting capabilities that will shape the actual impact from the Middle East situation,” said Karen Li, head of Asia infrastructure, industrials and transport research at J.P. Morgan. Airline stocks dropped worldwide on Tuesday. Ryanair’s Michael O’Leary said the carrier has fuel locked in for nearly a year at about $67 per barrel, cushioning volatility. Reuters
The sharpest effects for IAG show up at British Airways. The UK Foreign Office announced a charter out of Muscat at 1900 GMT Wednesday. British Airways, for its part, couldn’t operate flights from Dubai, Doha, Abu Dhabi, Bahrain, Amman or Tel Aviv, but lined up an additional Oman departure in the early hours of Thursday, local time.
Some rivals are beginning to tally the damage. Wizz Air expects Middle East tensions to shave roughly 50 million euros ($58.19 million) from its fiscal 2026 net profit and will keep flights to various destinations in the region grounded until at least March 7.
Cargo is taking a hit, too. Global air cargo capacity dropped 22% from Feb. 28 to March 3, according to numbers from aviation and logistics firm Aevean, as the conflict escalated. That squeeze is making space scarce and driving up prices on certain Asia-Europe routes, analysts and logistics executives told Reuters.
IAG, which operates British Airways, Iberia, Aer Lingus, and Vueling, leans heavily on both long-haul routes and European short-haul flights. The group also generates revenue from cargo—usually loaded into the bellyhold of its passenger jets.
Regulatory filings this week revealed share sales by two top IAG executives. Carolina Martinoli, who leads Vueling, offloaded 293,889 IAG shares at 4.336 pounds each. Over at Iberia, CEO Marco Sansavini sold 350,000 shares at 4.329 pounds. The transactions were disclosed under UK and EU market-abuse regulations for so-called “persons discharging managerial responsibilities” (PDMRs). Halifax Investments
Still, the main risk sticks around: ongoing airspace restrictions mean airlines could be stuck with longer routes, pricier jet fuel, and weaker demand if travelers put off plans or have trouble rebooking. Even if restrictions lift quickly, carriers would be left hustling to reposition planes and piece schedules back together.
IAG shareholders have their eyes on the duration of capacity limits at important Gulf hubs, and they’re watching fuel prices, too. Either factor can easily outweigh any gains in punctuality or bookings from day to day.
