British Airways‘ parent company, International Airlines Group (IAG), has placed a significant order for new aircraft following the recently announced trade agreement between the US and the UK.
On Friday, IAG confirmed the purchase of 32 Boeing 787-10 Dreamliner aircraft, specifically for its British Airways fleet.
This substantial investment in new planes comes on the heels of the trade deal, suggesting a potential link between the reduced tariffs and IAG’s decision to purchase American-made aircraft.
The deal, hailed as “historic” by UK Labour leader Sir Keir Starmer, reduces or eliminates US import taxes on a range of British goods, including cars and steel. Crucially for the aviation industry, the agreement also removes tariffs on plane engines and other aircraft parts.
In addition to the Boeing order, IAG also announced the purchase of 21 Airbus planes for its other airlines. US Commerce Secretary Howard Lutnick said on Thursday that plane engines and other aeroplane parts would also be excluded from trade tariffs as part of the trade deal.
“We’ve agreed to let Rolls-Royce engines and those kinds of plane parts come over tariff-free,” he said.
He told reporters that an unnamed British airline had agreed to buy 10 billion US dollars (£7.56 billion) of Boeing planes as the trade deal was agreed.
IAG did not confirm how much it had paid for the planes in its Friday announcement.
Chief executive Luis Gallego said the order was a “milestone” for the conglomerate and would “strengthen our core markets” over the next decade.
The Boeing order marks an early sign of reduced trade friction between the two countries, after President Donald Trump slapped at least 10 per cent import tariffs on all British goods at the start of April.
IAG said the Boeing planes would be powered by American General Electric engines, while the Airbus craft will have British-made Rolls-Royce engines.
The aviation industry has been pushing the Trump administration to allow aircraft and other parts to be either wholly or partially exempt from the worldwide tariff regime.
The Thursday trade deal between the two countries means US import taxes that had threatened to cripple British carmakers were cut from 27.5 per cent to 10 per cent, while a 25 per cent tariff on steel has also been removed entirely.
It will see the blanket 10 per cent tariff imposed on imports by Mr Trump as part of his sweeping “liberation day” announcement remaining in place, but talks are ongoing in a UK effort to ease them.
Also on Friday, IAG said it had seen “some recent softness” in economy ticket sales by US holidaymakers in recent months.
However, it said it had seen “strength” in premium tickets like business class, which mitigated those effects.
Mr Gallego said: “We continue to see resilient demand for air travel across all our markets, particularly in the premium cabins and despite the macroeconomic uncertainty.”
