British Airways Owner Agrees to $13 Billion Deal for 32 Boeing Aircraft

Heathrow Power Outage Inflicts £40 Million Loss on British Airways

British Airways has disclosed that the power outage at Heathrow Airport in March, which halted operations for an entire day, resulted in a £40 million loss for the airline. The disruption was triggered by a fire at a substation, causing widespread frustration among airlines over Heathrow’s handling of the incident and the prolonged recovery period. According to a report from the National Energy System Operator, although power was restored, Heathrow took seven hours to resume operations, initially allowing only a limited number of flights to depart.

Sean Doyle, British Airways’ chief executive, highlighted the financial impact, noting that the airline currently lacks automatic compensation mechanisms from either Heathrow or its insurers to cover lost revenue, passenger refunds, and care costs. “We’re obviously assessing options, but under regulation at the minute, we’ve no immediate recourse,” Doyle explained. Heathrow has commissioned a review of the incident, led by non-executive director Ruth Kelly, with findings expected later this month.

IAG Reports Robust Financial Performance and Announces Major Aircraft Orders

Despite the operational setback, British Airways’ parent company, International Airlines Group (IAG), reported a strong financial performance in the first quarter, with revenue rising 9.6% to €7 billion (£5.9 billion) and operating profit increasing by €130 million to €198 million. In a strategic move to modernize its fleet, IAG has agreed to a $13 billion (£9.8 billion) deal to acquire 32 new Boeing aircraft for British Airways. This agreement follows a recent US-UK trade deal that eliminated tariffs on the aviation sector, a development that may prompt competitors to reconsider their own fleet renewal plans.

Notably, the Boeing aircraft ordered will not be equipped with Rolls-Royce engines, despite the timing coinciding with the US decision to remove tariffs on Rolls-Royce jet engines. Alongside this, IAG announced an $8 billion order for 21 Airbus aircraft, which will be allocated across its other carriers, including Aer Lingus, Iberia, and Vueling.

Luis Gallego, IAG’s chief executive, welcomed the tariff removals but clarified that the aircraft orders were not directly influenced by the trade agreement. “The UK government and Boeing were aware we were in this tender process. Tariffs in general we believe are not good... no tariffs will help us to develop the business, and I assume they took that into negotiations,” Gallego stated. Nicholas Cadbury, IAG’s chief financial officer, added, “It’s helpful for us, but it wasn’t part of the decision.”

Fleet Modernization and Commitment to Sustainability

The newly ordered Boeing aircraft will incorporate the latest advancements in cabin design, enhancing passenger comfort and space. This investment aligns with British Airways’ broader strategy to improve customer experience and operational efficiency. IAG’s focus on acquiring a modern, fuel-efficient fleet reflects its commitment to sustainability and maintaining a competitive position in the evolving global aviation market.

Through these acquisitions, IAG aims to ensure its airlines operate some of the most advanced and environmentally efficient aircraft available, positioning the group to meet emerging market demands and regulatory challenges.