Morning, ladies and gentlemen, welcome to International Airlines Group Q1 2026 results. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session through the phone lines. Instructions will follow at that time. I would like to remind all participants that this call is being recorded. I will now hand over to Luis Gallego, Chief Executive Officer, to open the presentation. Please go ahead.
Thank you very much. Good morning, everybody, welcome to the IAG first quarter results. As usual, I'm joined by Nicholas Cadbury, our CFO, as well as the IAG Management Committee. For the first time, I would also like to welcome José Antonio Barrionuevo, our incoming CFO, to the call. I'm pleased to report a strong first quarter. We grew revenue by 1.9%, reflecting continuing a strong demand for our airlines and networks. We grew profit by 77% to deliver operating profit of EUR 351 million. Our operating margin improved by 2.1 points to 4.9% in our seasonally quietest quarter. This good profit performance was mostly achieved before the impact of the Middle East conflict, which we expect to have a more substantial impact in the rest of the year.
We have started this year in an incredibly strong position, we are uniquely well set to navigate the headwinds that the crisis has created. We have leading positions across diverse geographical markets. We have leading brands across different customer segments in those markets. We have structurally high margins supported by our well-established transformation program that help us to absorb some of the effects of this volatility. I will also mention at this point our capital light loyalty business, which grew revenue by 10% and profits by 32.6% at a 20% margin. We have an incredibly strong balance sheet at 0.5x net leverage. Finally, due to our cash generative business model, we are on track to complete the remaining EUR 1 billion of our excess cash return by February 2027, as we previously announced.
Bringing this all together means that we have an opportunity now to prove how resilient this business is. We have faced macro challenges like this before. We have a well-established transformation program, which means that we are taking all the revenue and cost action that you would have taken, sorry. We are taking all the revenue and cost action that you would expect. We are well-positioned to take advantage of opportunities that arise as a result of the current market situation. In summary, I'm very confident in the longer term prospects for this business. Now I hand over to Nicholas to take you through the numbers in more detail.
Thank you, Luis. Good morning, everybody. I'm pleased to share our first quarter results with you. Before I go to the performance, I just want to highlight that this quarter contains only a limited impact on fuel costs from the Middle East conflict. We expect subsequent quarters will be impacted to a greater extent. Focusing on the first quarter, we delivered a strong operating profit of EUR 351 million, up EUR 153 million versus last year, driven by the strong passenger revenue growth, partly offset by an increase in fuel costs in March. The increase in operating profit benefited from the early timing of this year's Easter holidays and a small impact from the closure of Heathrow Airport in March, on March 21st last year.
We've seen strong demand across most of our markets, particularly in our premium cabins and in both the North and South Atlantic markets, which represents around about half of our capacity. Cargo revenue reduced slightly year-on-year, driven by the normalization of the Red Sea-related pricing surge, particularly in the first half of last year, and a small reduction in tonnage relating to less Middle East capacity. Other revenues saw a small increase year-on-year at constant currency, with a reduction in third-party MRO revenue at Iberia due to a change in how certain components are charged, and this was offset by the continuing growth in our loyalty business. FX, particularly the impact of the weaker USD against both the euro and the sterling, drove a benefit of EUR 48 million to the profit in the quarter.
The right-hand side of this shows the strong performance of our businesses. Our leadership positions across diverse markets and strong brands drove this exceptional performance, with all but Aer Lingus delivering improved results in the quarter. Aer Lingus saw a larger seasonal loss year-on-year, driven by the ongoing high level of capacity from competitors into Dublin, putting pressure on yields, together with the Manchester base closure costs. British Airways delivered high profits and margins year-on-year, driven by strong passenger unit revenues, which increased 8.5% in the quarter. BA saw strong demand across its long-haul network, in particular on North Atlantic and short-haul leisure routes, in addition to a strong business travel market.
Iberia delivered an operating margin of over 9% in the quarter at 1.6 percentage points year-on-year, driven by a strong revenue and improved cost performance. Iberia saw strong demand on routes to Latin America and in the Spanish domestic market. Vueling also delivered an improved results with a smaller seasonal loss year-on-year, driven by a strong revenue performance. The performance of Spanish domestic routes was particularly pleasing, although routes to the U.K. and Italy were a little bit more challenging. Loyalty, including our BA Holidays, continue to deliver high quality, high margin, asset light earnings, with profits increasing over 30% in the quarter and margins increasing to over 20%. The growth in profit came mainly in the loyalty business, driven by non-airline partnerships, with the holiday business flat year-on-year as we invest in the holiday platforms.
Looking forward, we expect loyalty to deliver just over 10% earning growths for the full year. Turning now to show our regional revenue performance in more detail. The revenue performance was extremely strong, with passenger unit revenue increasing 8.2% at constant currency and 3.5% on a reported basis. Capacity was broadly flat year-on-year, less than we guided at the full year results due to the cancellations of flights to destinations in the Middle East, which would normally be fully reallocated to other markets at short notice, and due to the availability of aircraft due to ongoing technical challenges. We were very pleased with the North Atlantic performance, where unit revenue increased by 6.8% at constant currency on a small reduction in capacity. The underlying performance sequentially improved compared to the previous quarter.
Whilst the North Atlantic performance worsened for Aer Lingus, driven by intensified competition, performance of British Airways was notably strong. BA saw strong demand in both business and leisure segments for both premium and non-premium cabins, business segment revenue grew from all points of sale, but notably strong from the North Atlantic point of sale. Latin American Caribbean continues to be our strongest long-haul network performer, with unit revenue increasing by 9% at constant currency on year-on-year, and increasing capacity of just under 2%. All three cabins for Iberia contributed to the strong performance, in addition to both the Spanish and Latin America point of sale. Domestic saw very strong unit revenues, which increased 18% at constant currency on a 2.5% reduction in capacity.
Performance was strong across both the Canary and the Balearic Islands, in addition to the Spanish mainland, partly benefiting from the disruption to the train services. Unit revenues on European routes increased 6% on a 1.6% cut in capacity. Aer Lingus short-haul performance worsened as a result of additional competition, and BA and Iberia saw strong performance in business and leisure segments, with Vueling seeing benefits from improving their revenue management approach and the timing of the Easter holidays. Africa, Middle East, and South Asia was impacted by the Middle East conflict, with cancellations en route to the Middle East in March, offset by benefits from customers shifting travel away from the Middle Eastern hubs onto routes in South Asia and Africa.
Likewise, in Asia- Pacific, routes benefited in particular from passengers avoiding the Middle Eastern hubs in March, with Far East routes seeing good growth in both business and leisure segments. Total unit costs improved by 0.5%, and non-fuel unit costs improved by 0.9% year-on-year. Fuel unit costs increased 0.9% in the quarter. Whilst fuel rose during the quarter, particularly from February 28th due to the Middle East conflict, this was largely offset by our hedging strategy and the timing of the pricing of our commodity contracts. The Q1 cost performance benefited from the FX movements of 4.6%, increasing +3.6% on a constant currency basis.
This partly reflects the pay deals, the impact of employee national insurance increases in the U.K., supply cost increases, and the higher ownership costs driven by investments in our new fleet. Capacity will be lower than the 3% increase I guided at full-year results in February. Whilst we're taking cost actions to mitigate the increase in fuel price, the lower than planned capacity growth will be a slight headwind on non-fuel costs. Adjusted EPS increased by 56% in Q1, reflecting the strong performance in the quarter, with adjusted profit after tax increasing by 71%. Adjusted EPS increased by 56%, lower than the increase in profit after tax, due to the positive fair value movement on the convertible being included in profit but excluded from the EPS calculation. This was partly offset by the lower share count due to our share buyback program.
Our balance sheet continues to be exceptionally strong and continues to strengthen further during the quarter. Net debt reduced both year-on-year and quarter-on-quarter, falling to EUR 4.2 billion at the end of March, reflecting the strong profitability and seasonal working capital inflows and the buildup of bookings for future travel ahead of the peak summer. Likewise, net leverage fell to 0.5 x, reflecting lower net debt and strong profitability. Q1 saw one A321XLR delivered, and we still expect to take delivery of 17 aircraft this year. Lastly, we expect to spend about EUR 3.5 billion on CapEx this year, slightly down on the EUR 3.6 billion guided in February, but mainly just due to small phasing changes.
We remain committed to the investments we are making as part of the transformation programme, such as the commercial replatform and BA, which is delivering benefits for us this year. Well, on that note, I'll hand back to Luis, and thank you.
Thank you, Nicolas. With regards to the Middle East situation, we have already taken decisive action, and we continue to ensure that we are controlling the things that we can control. Firstly, looking at our network, we have reallocated our capacity that we used to fly to the region, which was about 3% of the total group capacity. In the short term, some of that has been added to routes where there is currently a deficit of supply that was previously flown by the Middle East carriers. For example, British Airways has added flights to Bangkok, Singapore, and the Maldives. Some has been reallocated back to core markets, such as by Iberia and Vueling, replacing Tel Aviv flights with more flights in their domestic markets.
Further out, we are also expecting more demand on routings which might previously have gone through the Middle East, such as from India to the United States. British Airways are also adding some alternative winter sun capacity to the Caribbean and Sri Lanka. We have also decided to use some of the spare aircraft capacity to add resilience to our schedules, which have been affected by engineering and maintenance supply chain issues. We are continuing to review our plans for the longer term should the conflict and higher fuel prices be sustained. On fuel price, we continue to be well hedged for the rest of the year. This allow us to protect customers to some extent from the volatility and allow us to take considered decisions on prices, on pricing and capacity.
We are confident with the fuel availability through the summer due to our positions in our main markets and the fact that we have invested in self-supply capability in our hubs. Today, the situation is more about price than availability. We are also working with governments in each of our home markets, as well as with the EU, to ensure that the industry is getting the support it needs to navigate this crisis. Moving on to our outlook for the rest of the year, as well as into the longer term. As I mentioned at the beginning, we start from a very strong position with our diversity of markets and brands, high margins, and a strong balance sheet.
Demand for travel continues to be robust in our main markets, and we have seen resilient book revenue at 80% for the second quarter, which is in line with historical level. The impact of the higher fuel price will inevitably lead to lower profit this year than we originally anticipated. We are now forecasting a total fuel cost for the year of EUR 9 billion, which is EUR 2 billion higher than the EUR 7 billion scenario for the 31st of December 2025 that we presented on, at our full year results in February. We are actively addressing these headwinds, and as a result, we expect to recover around 60% of this fuel cost increase this year.
This will be done through revenue and cost management, reflecting the different markets in which our brands operate, as well as the benefits of our transformation program. For example, this includes the revenue uplift of the new British Airways commercial platform, which last year included a new revenue management system, a payment system, and website booking channel. We are using data-driven software and insights to deliver more efficient, lower-cost operations, such as with the AI-based engine maintenance tool that we are developing around the group. Our investments in new, more efficient fleet will play their part. We have a strong track record of execution to ensure this is achieved. You can be assured that we know what to do, and that we will take the right actions to ensure the long-term success of this group.
We continue to expect to generate significant free cash flow for it to be slightly lower than the EUR 3 billion for this year that we guide at the results in February. Based on our strong cash generation, we are on track to continue the remaining EUR 1 billion of excess cash returns by the end of February next year, as previously guided. Meanwhile, our long-term prospects remain strong, if not even stronger than before. We expect it to be difficult for less strong airlines to cope with the high price of fuel, which can lead to opportunities for us, as well as M&A, a more consolidated industry. Our business model and strategy will ensure that we remain one of the best performing airlines groups in the world.
On that note, I will open now the call to questions.
Ladies and gentlemen, we will now begin the question and answer session. To ask a question on the phone line, please signal by pressing star one on your telephone keypad. We ask that you please limit your questions to a maximum of two. We will pause for a moment to assemble the queue. Your first question comes from line of Alex Irving from Bernstein. The line is open.
Good morning. Thanks for taking the questions. Two from me, please. The first is on winter capacity. You set out your plans for Q2 and Q3, but what are your early thoughts on Q4? Lower contribution quarters, hedging starts to roll off, could capacity even be down year on year? Second one, Luis, I'd like to pick up on the last comment that you made. You rightly point out that your margins are higher, your balance sheet stronger than competitors in your main markets. Do you expect competitors to retrench, enabling you to invest counter-cyclically and capture share? And if so, where do you see the biggest opportunities, please? Thank you.
Good morning. When we reported full year 2025 results, we expected an increase of capacity for this year of around 3%. What we are saying now is that we are going to reduce to 1%, more or less. For the Q2 is 1%, for the Q3 is 2%. We're not talking still about the Q4 because still we are working on the plans. To be honest, the capacity is going to be also affected by this situation. In principle, the growth that we expect for the year is going to be around 1%. The second question about opportunities that we can have.
Yes, as we said, we have started this crisis in a very strong position. We are well-hedged. As we said, we continue with our transformation, we are going to navigate this crisis much better than others. We have seen in previous crises that this bring opportunities to the table. We have seen the situation of, for example, of Spirit in the U.S., and we are sure that in Europe some airlines are going to have also difficulties. Some of them also, they will need to reduce capacity, and that can be an opportunity for us. Usually after this crisis, we are even stronger than we were before.
Your next question comes to line of Jaime Rowbotham from Deutsche Bank. Your line is open.
Morning, everyone. two from me. Firstly, in terms of the revenue and cost initiatives to recover the fuel cost headwind, where are you finding it easier to increase fares without too much impact on demand? Any comments on forward bookings or forward pricing would be welcome. What specifically are the cost initiatives that you refer to, please? Secondly, in terms of jet fuel supply, in addition to some shortages in Southeast Asia, there've been a few reports of issues in Europe, places like Italy, Sweden. Have you been completely unaffected so far, and do you expect that to remain the case? Thanks very much.
Okay. Good morning. About the pass-through, we said that we expect to recover around 60% of the higher fuel cost that we are going to have. Yes, it's a mix of revenue and cost management actions. For sure, the revenue improvement that we are talking about is an average. We are going to have a variation by market and also by segment. We are going to have a stronger recovery for sure in long-haul and premium markets, and we are going to have more difficulties to increase the pass-through in more competitive markets like short-haul Europe. In terms of cost, what we are doing is reviewing all the discretionary spend that we have.
We don't have any plan to cut investments because at the end we continue with our plans to be stronger for the future. We continue with our transformation program to be more efficient. About the fuel shortages. I think all of you are receiving mixed messages about fuel. For us, all the job that we did previous to this crisis for many years is delivering results now. It's true that there is less jet fuel coming from the Middle East, that there are other regions with record supplies, for example, the U.S. This at the end is a global supply chain.
All the action we did in order to increase our self supplying are working now. We are confident that we are not going to have any issue for the summer in our main hubs and main markets. Asia was concerned some weeks ago, now we know that Asia is also building up reserves. That's the reason of the confidence that we are going to operate the schedule that we have for the summer.
Your next question comes to lines of James Hollins from BNP Paribas. Your line is open.
Thanks very much. I'd like to start by saying, best of luck to Nicholas, and thanks for everything. Hello to José Antonio. Nicholas, I'm gonna send you off with a particularly annoying question, which is around full-year CASK ex fuel or unit cost ex fuel. Clearly was guided down 1%. Very obviously you removed that because you'd cut around 2 percentage points of capacity. I was wondering with, obviously Luis' take on some sort of cost actions, discretionary spend, et cetera, how close you might still get to down 1%, and should we still assume 2 percentage points of FX benefit? Then one for Lynne, if she's on, and Aer Lingus. Clearly we've had troubles with strikes. We've now got or seen the ongoing troubles with, competition on transatlantic.
Is that getting worse, is it time to start thinking about sort of transformation plans, network, considerations, et cetera, on Aer Lingus? Thanks very much.
Thanks, James, and enjoy the work from you too. Thank you for that. Just on fuel CASK, You're right. At the year-end, we said it'd be down about 1% overall. I don't think we'll be far off from that actually. The reason we haven't given guidance is we don't quite know what the denominator in the ASK is gonna be in Q4 yet as well. I'd get my anticipation it would be kind of closer to flattish overall. Aer Lingus.
Yeah. Shall I pick up? Yeah, morning. On the Aer Lingus side, there's various reasons why I'm positive about the outlook. Certainly, Luis has already commented on the transformation programme that's delivering and going well. We do need to go further to get to this group 12%-15% operating margin, and we're all very focused on that. Cost reduction is a major part of the transformation and accelerated that cost reduction program.
To get to your question around capacity, you'll have seen part of the impact in Q1 this in Q1 2026 was the closure of Manchester. Manchester was profitable, but it wasn't profitable enough to get to the 12%-15% operating margin overall for our needs. That's why we took that decision to close the base. What we're looking at now is what's the right size of network for 2027, particularly given we expect some of this fuel price increase to continue into next year. Importantly, it's how do we tackle the seasonality. We can make good money in the summers, but we're a very seasonal country. As we carry the cost through the winter, that's increasingly a problem with this fuel price.
The more we can reduce our cost profile as the year goes on, the more we can keep our final program intact.
Cool. Thanks.
Your next question comes from the line of Stephen Furlong from Davy. Your line is open.
Yeah, morning, guys. Two questions. Just on first one, short haul, I mean you obviously stated that the short haul market remains competitive, so just on the general pass-through comment, 60%, I mean, is it in short haul almost close to zero? Is it just too many seats in that market? Second question on LatAm, Iberia. Certainly nothing really changes in terms of your view on that market in its entirety. I'm thinking of the one or other will acquire a minority stake in TAP. Does that change anything at all for Iberia's excellent performance and branding effort? Thank you.
Just on the short haul, we are getting some pass-through on short haul, but you are right. It's towards the lower end. It's not at the 60%. The other thing on short haul, of course, you get a shorter booking curve, so we get less visibility going forward, so it's harder to call what that will look like overall. As Luis said earlier, you're getting much more traction on pass-through on the kind of higher premium, particularly on the North Atlantic overall.
On, and LatAm, well, first, on the short haul, there is a portion of our short haul, which is the domestic Spain, which is having an evolution in itself. You have seen that in Q1, our overall domestic performance has been very strong with an increase of in constant currency 18% of the RASK. That is driven by two main factors in the domestic. One is the fact that the train disruptions have generated increased demand that we believe is going to be structural towards the flight traffic.
In the second place, we've also seen some increased demand after the disruptions in the Middle East that seem to indicate that there is also an increasing demand following people that are moving away from other Mediterranean areas to the, in particular, the Spanish islands. Going to LatAm, we continue to see a very strong evolution of the market. No any significant changes. There are some elements that are reinforced in this. For instance, we've been commenting how Madrid is evolving as a new Miami. We are now having another half a million people that are moving in 2026, their residence to Spain, and Madrid in particular. Continuing the same trend that we've seen in 2025.
To be honest, we don't see any influence of our plan to take that to 2030 flight plan due to the TAP possible evolution. As you remember, the TAP interest for the group was specifically for the Brazilian market. It's one where IAG and Iberia are not particularly present. Therefore, our potential and development in the region remains independent from the group decision on TAP.
Your next question comes from Harry Gowers at JPMorgan . Harry, Harry. Harry, your line is open.
Hey.
Hello?
Hello, Harry. Go ahead.
Hey, can you hear me?
Yeah.
Yeah, we can hear you.
Okay, great. Sorry. First question, I mean, there might be some bad maths involved, but I think when I back out your kind of revenue pass-through comments, it might imply that, you know, pricing might be similar to the Q1 rate for the rest of the year, the +3.5%. Is that what you're implying with your pass-through figures, or should we be assuming that RASK will accelerate into Q2, given that's what some of your peers have been highlighting? Second question, I just wanted to follow up on Jaime's question earlier, just on the stickiness of higher prices and whether you are seeing any kind of less willingness as time goes on for passengers to pay elevated ticket prices in any long-haul markets. Thanks a lot.
Yeah, your calculation on the first question's about right, roughly, if you do the math on it. Not so bad math. I missed the second question actually.
Yes. Can you repeat the second question, please?
Yeah. The second one was a follow-up on Jaime's question earlier, just on the stickiness of elevated ticket prices and whether you are seeing kind of less willingness as time goes on for passengers to pay elevated ticket prices in any of the long-haul markets.
No. To be honest, for the time being, what we see for the second quarter and the third quarter is that the trading remains positive across the group and very strong with resilient demand. We don't see any weakness for the time being. We are going to continue with the current scheduling as is that.
Great. Thank you.
Welcome.
Your next question comes from line of Savanthi Syth from Raymond James. Your line is open.
Hey, good morning. For the first question, I was just wondering how much of 2Q and 3Q were sold prior to kind of the crisis and the, their increasing prices, and just curious what the kind of the post-crisis RASK trends are that's showing up in the kind of the new booking. For the second question, I was just kind of curious on your South Atlantic, what your point of sale mix was and what the impact of kind of the strengthening, some of the strengthening Latin American currencies might mean for revenue and demand.
On the first question about what was pre-sold, I think when we did our Q February results, we said that Q2 was about 40% sold overall. Now it's 80%. I don't think we gave a number for Q3 overall, but we're about just under 40% sold currently.
On the South Atlantic, you've seen in Q1 that despite the currency effect, the rest of South Atlantic has been incredibly strong. We have an increase of 9.2%. There is a track record of resilience of demand in travel in South Atlantic market despite the volatility of the local currencies. This is something that we have seen all along the last decade. In fact, we are not seeing any impact of demand related to that at this stage.
Thank you.
Your next question comes from line of Ruairi Cullinane from RBC Capital Markets. Your line is open.
Yes. Good morning. The first question is there any reason why Q2 should diverge significantly from the 60% fuel recovery rate in full year 2026 as a whole? Secondly, how have you approached hedging since the war? Have you been sort of opportunistic given the volatility or followed your policies as usual? Thank you.
Just in terms of the kind of the pass through, I think kind of other people called actually, it's kind of lower in Q2 because you had about 40% already booked, so it's more like kind of probably 50% for kind of Q2 overall. Then it grows as you go through the year. In terms of hedging, it's quite difficult to be opportunistic at the moment because it's, it can fluctuate by ±5% during the day. What you look at on the screen isn't necessarily there when you come to buy it. It's much more volatile than that.
We're really just continuing with the kind of existing policy that we have, slowly as it goes, continuing to hedge, and not taking kind of any kind of big calculated risks or opportunities either way.
Thank you.
Your next question comes line of Andrew Lobbenberg from Barclays. Your line is open.
Hi there. Nicholas, it's been a blast working with you. Thank you. What can you tell us about the back of the bus? Obviously the front of the bus on long haul is good and it's all very constructive, you know, just how weak are things in the back? How does it compare North Atlantic against South Atlantic? You know, what are the levers you've got to try and improve potentially the performance in the back? Otherwise, what can you tell us about trading on holidays? Obviously, you know, the likes of TUI, Jet2 and easyJet have all been somewhat cautious on holidays. I think BA Holidays was a really nice momentum driver. How's that holding up in the current strange situation?
Okay. Well, first of all, about the back of the aircraft, as I said before, we continue seeing a strong demand there. We don't see any weakness for the time being, maybe Sean you want to comment?
Yeah. I think long-haul economy and long-haul World Traveller Plus are performing robustly. I think again, the fact that we have a greater mix of premium economy versus economy is also helping with stickiness and pricing. We do see that across all of our main markets. As Nicholas, I think, mentioned in the intro, you know, the fact that people haven't been traveling as much over the Gulf has been benefiting the economy cabins where BA is providing an alternative. As we said, the North Atlantic has been robust as well.
Same applies for South Atlantic. I mean, if you look at the tourism data for Q1, and in particular for Southern Europe and to Spain, we have an increasing tourism from the U.S. to Spain of 11% in Q1, and 9% from Latin to Spain. Extremely solid.
About holidays, maybe Adam you want to comment?
Sure. Yeah, I think on the holiday side, I think we're seeing a mixed p erformance. You know, we're clearly seeing weakness in the Middle East. Dubai was our number two destination, so that has clearly had an effect. We're also seeing some strength elsewhere as customers change their travel plans, particularly places like the Caribbean, the Indian Ocean are particularly strong. We are seeing customers book later as well. That's a trend I think that the market is talking about too. One thing I would say is that we're seeing more revenue growth from our BA club members, and they're booking a higher average revenue per booking, so that's helping us through this. You'll see more initiatives this year coming to encourage our BA club members to book with BA partners.
Your next question comes to line of Gerald Khoo from Panmure Liberum. Your line is open.
Morning, everyone. The ability two from me. Firstly, can you explain how fuel self-supply works? Who are you cutting out? What advantages does it give you, and how does it work when you're presumably still using common infrastructure at the airport? Secondly, on RASK, you've given us a constant currency number, but are you potentially able to separate out the uplift from mix as well to illustrate how much premium is helping you, please?
About your first question. We have in U.K. and Ireland, our own supply of fuel and our own inventory at the airport. That helps to the situation. It's different in Spain, in Spain, we don't have a problem because we have a lot of refineries. We, for example, has a license to put fuel in Heathrow. We also have long contracts with the different providers that I think that gives a lot of stability. May I don't know if Sean wants to.
Yeah. Look, I think we've got two or three benefits. One, we do strategic contracts with big providers, which gives us supply certainty. Two, it's more efficient actually in terms of self-supply. Three, it allows us to forward buy opportunistically when we have constraints in the market like we have today. The fact that we're able to, you know, have more control over our supply situation with volatility in the market is a big advantage that will play out for us over the summer.
It's a big investment as well.
Yeah.
We've got a port at the Isle of Grain. We've got trains that come twice a day.
Come directly to Heathrow.
So it's something that.
Yeah.
Difficult to replicate.
It's been something we've been working on for 10 years.
I'd just also comment that we have the ability to supply via the Isle of Grain and then across into Dublin as well. Just you asked a question, Gerald, about kind of RASK, kind of splitting it out. I'm afraid we don't normally do that actually overall. Probably won't go into that detail overall, I'm afraid.
Your next question comes to line of Muneeba Kayani from Bank of America. Your line is open.
Yes. Good morning. I wanted to follow up actually on the previous question with just to understand what sort of RASK trends have you seen on bookings, kind of post the start of the war and the fuels price spike? What we've heard from others is a big increase in fares. Your peer talked about, what, 14% on average increase, and your partner, American, talked about, like, 25% increase on fares to London. Kind of what are you seeing on that fare increase? Then kind of related to that, on your fuel recapture, and maybe you talked about it earlier in the call because I joined a bit late, like, your 60% seems to be lower than what others are talking about, both in the U.S. and Europe.
What do you think is driving that, Do you think fares will come down? Is that what you're assuming? Because fuel prices will, based on the forward curve, fuel prices are expected to come down. If you can give a bit more color on that 60%, for the rest of the year. Thank you.
I'll probably combine those two questions together, if that's okay. It's difficult for us to comment on other airlines. We're not quite sure what their assumptions have been. What we're just thinking is what we're seeing at the current moment, as we said, we've got good visibility through Q2 and a little bit into Q3. Visibility into Q4 is fairly limited at the moment. It'd be, I wouldn't kind of comment too much on that at the moment overall. I mean, in terms of the 60% pass-through, if you do the math, it means you've got to go get a 4%, 5% uplift in your kind of yields and load factors overall, going through.
You'll see, as we said earlier, you're seeing that slightly different across the different routes. You're seeing it strongly across the North Atlantic. The South Atlantics is good. Although you've got a bigger mix of economy cabins, as we just said, and it's a bit harder to pass through in Europe at the moment because it's quite competitive overall. It's a mixture of those overall.
Your next question comes to line of Conor Dwyer from Citi. Your line is open.
Hey, good morning, all. First question I had was around consolidation. You spoke a little bit about being approached. I just, I'm obviously not gonna ask you for any names, but more so, you know, if we think about what exactly would you be looking for as the, you know, perfect fit. Is it something to, you know, bolster your share in a particular long-haul market? Is it perhaps?
You know, bolster your feeder traffic into your hubs. You know, what are the kind of attributes of a company that you would be looking for? Secondly, around the commercial transformation, it's been mentioned a couple times on this call for BA. From Sean, really what I'm looking for is a bit of an update there in terms of, you know, how far along are we on that? How much has been spent? How much is still to be spent? When we would expect, you know, the meaningful benefits to flow through for that business, if not all already. Thank you very much. Finally, Nicholas, it's been a pleasure. All the best in the future.
Thank you. Thank you. About the consolidation. What we say is that the current environment may create consolidation opportunities, but you know that in IAG we are always highly disciplined about these opportunities. Recently, for example, we withdraw from the TAP bidding because we thought it was not going to deliver value for our shareholders. When we analyze the different options that we can have for the future, and we are always screening the market, we look for opportunities where we can apply the model that we have at the group. We can improve the performance of the different companies, and also for sure they can benefit from the strength of the group.
Having the objective that we always said a margin between 12% and 15% and a ROIC margin similar. I think that's the screening that we do, and if we see an opportunity, we will explore it, but it's not a must for us to have more companies in the group.
On the commercial transformation, I suppose there's many dimensions to it. I think, last year we rolled out a new payments platform, and over the summer we rolled out a new revenue management system. I think, we're very happy with the results that we're seeing. We've a lot more dynamic pricing, particularly across our long haul network, which gives us shorter step-ups in terms of trading up. Also we're seeing much better ability to manage what we call O&D flows across connecting markets. That's working well. Payment platforms are working very well. If you look at ba.com and the re-platforming of that estate, the selling element of that is more or less there.
You know, the vast majority of all of our bookings now are going through the new platform, and we're seeing increases in look-to-book, increases in average revenue, big increases in CSAT. Again, you know, we kind of tipped over the critical point in the January sale, and we've scaled the penetration of that platform from a selling perspective over the quarter. Where we're at on the servicing side is, we're very close to getting our app out there. Got about 12,000 users on the beta version at the minute. Again, that's working very well in terms of trials from a servicing perspective and really, really big increases in CSAT. I think that will make a big impact on the servicing side of things.
A lot of the selling benefits in the new platform we're already unlocking, and again, we're kind of very encouraged where we're heading. I think going forward, we will do a lot more on the Shop Order Settle product management, kind of vision, as we work to kind of roll out Nevio between 2027 and 2029. A lot happening, but some big milestones to drop as well in the coming weeks.
Your next question comes from the line of Jarrod Castle from UBS. Your line is open.
Thank you. Good morning, everyone. Nick, from me, thanks for over a decade, I guess, as the CFO at companies that I've followed. Just in terms of buyback, you seem to be, you know, going at a very good pace. I mean, you talked about finishing, you know, by the end of the year, it looks like, you know, you'll finish sometime during the summer. You know, with potentially limited opportunities for M&A, should we expect that you give a bit more back to the market, let's say, with the Q3 reporting?
Then maybe one for Sean, but could you just give an update in terms of conversations with the pilots on pay and, you know, how far away are you in terms of whatever the, you know, terms are that you're willing to offer versus what they want? Thanks.
Just on the share buyback, we're coming up to finishing the current tranche of EUR 500 million in the next couple of weeks. As soon as we finish that, we'll get on to the, we'll see if we can get on to the next tranche as well, which we're looking forward to as well. Especially as with the share price where it is today as well, a good opportunity as well. We've said today that we're, we'll get on with the next EUR 1 billion, and that's what we're focused on at the moment. We'll, we'll keep you informed. That, that's all. I can't think why that would change at all.
Yeah, in relation to pilot, look, it was obviously a very close ballot, and we're now just surveying feedback from the community. I don't think it's just as binary as something like value in the deal. I think we were looking to modernize and transform a number of elements, and we're just reflecting on, you know, how various parts of the pilot community are feeling about those changes. Look, timing is everything as well. We were running an engagement over the course of, you know, some turbulent times, and we have to factor that in. Look, we're regrouping, we're engaging with our representative bodies, and we'll take stock of the feedback we get and sit around the table again.
There are no further questions at this time. I would like to hand back to Luis Gallego for closing remarks.
Okay. Thank you very much, everybody, for being here today. As you have seen, another strong first quarter. As we said before, we have started this crisis in one of the best situations in the market. We are sure that we are going to continue navigating the crisis, and we are going to be stronger at the end, taking the opportunity of all the transformation initiatives that we are having in the business. Thank you very much, and see you for the second quarter. Bye-bye.