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A $10bn (£7.5bn) jet order for British Airways played an unexpected role in getting Britain’s trade deal with America across the line.
International Airlines Group (IAG), which owns BA, said on Friday it had agreed to buy 32 Boeing 787 jets in a wager that the North Atlantic travel market will continue to thrive despite the impact of Donald Trump’s tariffs on the US and global economies.
The formal announcement to investors came hours after Howard Lutnick, Trump’s trade secretary, hinted at the deal in the Oval Office following a joint press conference with Sir Keir Starmer on the UK-US trade deal.
An unnamed British airline is poised to buy “$10bn worth of Boeing planes” Lutnick told bemused reporters on Thursday.
The order from Boeing, a titan of American manufacturing but one that has been struggling for years with safety and production issues, provided the icing on the cake for Trump’s team – allowing what amounted to an outline trade agreement to be linked to a solid piece of business.
The deal with the UK was Trump’s first since April 2, when the US president announced his “liberation day” tariffs on countries around the world. For British Airways, the expansion of its long-haul fleet at a time of economic turmoil amounts to a vote of confidence in the enduring health of business demand and UK-US travel.
Growth in the North Atlantic market, the most lucrative for intercontinental flights and one where BA is the dominant European carrier, helped boost IAG revenue by 10pc in the first quarter – with operating profit almost tripling.
IAG kept its nerve in backing a rebound in long-haul travel following Covid, when experts were predicting business trips would be permanently replaced by online video meetings.
However, a gradual return to the office and the restoration of traditional working norms has seen a recovery in North Atlantic bookings in business travel.
BA’s fortunes have soared as a result, spurring IAG to record profits that allowed it to pay down debt, restore its dividend and launch a share buyback programme, while embarking on a £7bn investment plan to improve service standards and reduce delays.
The stock enjoyed a year-long rally through February before falling back as Trump began to set out his tariff plans. It has gained more than 25pc over the past month, however, and was up 3.2pc as of early afternoon Friday.
BA’s strength is rooted in its dominance at Heathrow, Europe’s busiest airport and the biggest hub for transatlantic travel, backed up by sister carriers Iberia and Aer Lingus, which also serve the Americas from Madrid and Dublin.