International Consolidated Airlines Group Sa · LSE:IAG
International Consolidated Airlines Group Sa — Q3 2022 Earnings Presentation
32 slides from International Consolidated Airlines Group Sa's earnings presentation, Oct 28, 2022
Slide 1: Connecting People, Businesses and Countries: Quarter Three 2022 Results
INTERNAL USE ONLY CONNECTING PEOPLE, BUSINESSES AND COUNTRIES QUARTER THREE 2022 RESULTS 28 October 2022
Slide 2: Highlights
INTERNAL USE ONLY HIGHLIGHTS LUIS GALLEGO, CHIEF EXECUTIVE OFFICER
Slide 3: 3Q 2022 Financial Highlights
3Q 2022 FINANCIAL HIGHLIGHTS Profitability substantially recovered and better than previous market expectations • 3Q 2022 operating profit* of €1.2 billion (loss of €0.5 billion in 3Q 2021) and c.85% of operating profit of €1.4 billion in 3Q 2019 and despite negative FX impact of €120 million (vs 3Q
Slide 4: Outlook FY 2022
OUTLOOK FY 2022 Significantly positive operating profit and operating cash flow expected for FY 2022 • Forward bookings have continued to recover to a rate of c.90% of 2019 levels by volume and c.100% by revenue • Leisure bookings have recovered to c.90% of 2019 levels by volume and c.105% by revenu
Slide 5: Financial Results
INTERNAL USE ONLY FINANCIAL RESULTS NICHOLAS CADBURY, CHIEF FINANCIAL OFFICER
Slide 6: Significant step up in profitability of all airlines in the quarter
3 Q 2 0 2 2 F I N A N C I A L P E R F O R M A N C E AT G R O U P L E V E L Significant step up in profitability of all airlines in the quarter • Operating margin of 16.5% (€m) 3Q 2022 3Q 2021 3Q 2019 v19 • Operating result adversely impacted by FX impact of -€120m Passenger revenue 6,416 1,999 6,492
Slide 7: Aer Lingus significant improvement in operating profit
3 Q 2 0 2 2 F I N A N C I A L P E R F O R M A N C E AT A I R L I N E L E V E L Aer Lingus significant improvement in operating profit • Operating margin of 21.0% (€m) • Passenger revenue* 103% recovered vs 3Q-19 (82% in 2Q, 53% in 1Q): 3Q 2022 3Q 2021 3Q 2019 v19 • Total capacity at 90% of 2019 leve
Slide 8: British Airways very profitable despite Heathrow cap and only partial restoration of the network
3 Q 2 0 2 2 F I N A N C I A L P E R F O R M A N C E AT A I R L I N E L E V E L British Airways very profitable despite Heathrow cap and only partial restoration of the network (£m) 3Q 2022 3Q 2021 3Q 2019 v19 Passenger revenue 2,881 721 3,247 -11% Cargo revenue 245 263 176 +40% Other revenue 232 108
Slide 9: Iberia's operating profit back to 90% of 2019 level
3 Q 2 0 2 2 F I N A N C I A L P E R F O R M A N C E AT A I R L I N E L E V E L Iberia´s operating profit back to 90% of 2019 level • Operating margin of 15.0% • Operating profit reached 90% of 2019 result. Positive operating profit across all business areas (€m) 3Q 2022 3Q 2021 3Q 2019 v19 (Airline,
Slide 10: Strong 3Q performance for Vueling
3 Q 2 0 2 2 F I N A N C I A L P E R F O R M A N C E AT A I R L I N E L E V E L Strong 3Q performance for Vueling (€m) 3Q 2022 3Q 2021 3Q 2019 v19 Passenger revenue 1,016 461 882 +15% Cargo revenue 0 0 0 - Other revenue 5 5 5 0% Total revenue 1,021 466 887 +15% • Operating margin of 25.4% Employee co
Slide 11: Liquidity position strengthened and financing for 2022 deliveries mostly committed
LIQUIDITY Liquidity position strengthened and financing for 2022 deliveries mostly committed Liquidity position Liquidity and financing actions Cash + Facilities* (% of 2019 revenue) 1H 2022 • €200m ISIF facility agreed by Aer Lingus 36% 32% 47% 49% 53% 53% • 1 A350 sale and lease back for Iberia €1
Slide 12: Net debt relatively flat despite €0.4bn adverse non-cash FX movements
DEBT POSITION Net debt relatively flat despite €0.4bn adverse non-cash FX movements Net debt €m 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Mar 2022 30 Jun 2022 30 Sep 2022 Gross debt 14,254 15,679 19,610 19,777 20,169 20,318 Bank and other loans 1,954 3,369 7,485 7,425 7,160 6,940 Asset finance and leas
Slide 13: Stable pension situation
B R I T I S H A I R WAY S P E N S I O N U P D AT E Stable pension situation LDI portfolios NAPS valuation and contributions British Airways is not providing liquidity support to BA’s pension schemes • No deficit reduction contributions are being paid by British with regard to their LDI (Liability Dr
Slide 14: Fuel hedging - currently 68% in 4Q 2022 and c.47% for FY 2023
FUEL HEDGING Fuel hedging - currently 68% in 4Q 2022 and c.47% for FY 2023 Fuel hedging 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 Jet fuel price scenario $1,000/mt $900/mt $850/mt $850/mt $850/mt $800/mt $/€ scenario 1.00 1.00 1.00 1.00 1.00 1.00 $800/mt $840/mt $825/mt $820/mt $820/mt $785/mt
Slide 15: Business Update and Outlook
INTERNAL USE ONLY BUSINESS UPDATE AND OUTLOOK LUIS GALLEGO, CHIEF EXECUTIVE OFFICER
Slide 16: Investing for our customers
T R A N SFO R M I N G O U R B U SI N ES S – PRO D U C T / C U STO M ER O F F ER I N G Investing for our customers • Aer Lingus launched new routes • British Airways resumption of • Iberia improvements to the • Vueling ongoing digitalisation of to Cleveland and Hartford in routes to Hong Kong and Tok
Slide 17: British Airways building operational resilience
B R I T I S H A I R WAY S O P E R AT I O N A L P E R F O R M A N C E British Airways building operational resilience Recruitment accelerating* Punctuality and cancellations Punctuality 12,000 70% 50 Cancellations on the day OTP (D'15) (7d m.a.) 65% 45 10,000 60% 40 55% 35 8,000 50% 30 45% 25 6,000 4
Slide 18: IAG Loyalty continued strong contribution to the Group
T R A N SFO R M I N G O U R B U SI N ES S – PRO D U C T / C U STO M ER O F F ER I N G IAG Loyalty continued strong contribution to the Group • Engagement in our Loyalty programmes continues to accelerate • Registered more newly enrolled customers in first 9 months of 2022 than the whole of 2019 • Co
Slide 19: A balanced approach to employee agreements to enable investment
TRANSFORMI N G OUR BUSINES S – OUR PEOPLE A balanced approach to employee agreements to enable investment • Our people are central in our business and key in delivering for our customers • Pandemic and inflation have created pressure both for the business and for our people • Each opco has different
Slide 20: Global aviation follows IAG's leadership towards net zero emissions
T R A N S F O R M I N G O U R B U S I N E S S - S U S TA I N A B I L I T Y Global aviation follows IAG’s leadership towards net zero emissions ICAO agreement IAG SAF update IAG target of 10% SAF by 2030 (c.1m tonnes) ICAO* Member States adopted a collective long-term global aspirational goal (LTAG)
Slide 21: Premium leisure revenue fully recovered while business travel makes steady progress
PREMIUM REVENUE PERFORMANCE Premium leisure revenue fully recovered while business travel makes steady progress • BA’s premium leisure revenue remained c.85% of 2019 levels by % of 2019 Premium leisure and business revenue vs 2019 August and c.95% so far in October (September 2019 pilots strike 120%
Slide 22: Strong forward bookings at c.90% in volume and c.100% in revenue of 2019 levels
W E E K LY N E W PA S S E N G E R B O O K I N G V O L U M E Strong forward bookings at c.90% in volume and c.100% in revenue of 2019 levels Spain domestic International shorthaul Longhaul vs. 2019 (3 Jan 2021 – 23 October 2022) 24 July vs. 2019 (3 Jan 2021 – 23 October 2022) vs. 2019 (3 Jan 2021 – 2
Slide 23: FY 2022 capacity planned to be broadly unchanged at c.78% of 2019
F Y 2 0 2 2 C A PA C I T Y G R O W T H FY 2022 capacity planned to be broadly unchanged at c.78% of 2019 and 1Q 2023 c.95% Absolute ASKs (million) in 2022 and % proportion of 2019 ASKs ASKs c.95% c.87% 4Q 2022 FY 2022 1Q 2023 80,000 81% 100% % of 2019 78% 90% 70,000 100% 85% 105% 80% 60,000 65% 70%
Slide 24: Positive outlook for the rest of the year and beyond
CONCLUSION S Positive outlook for the rest of the year and beyond • Third quarter profitability substantially recovered and better than previous market expectations • Liquidity strength increased and net debt lower than previously expected, but likely to increase by end 2022 • Forward bookings remai
Slide 25: IAG Investment Case
IAG INVESTM EN T CASE Confident in returning to pre-COVID levels of operating profit based on IAG´s compelling investment case • Disciplined capital allocation Unique structure • Active portfolio management approach • Flexibility and rapid decision making • Customer and operational focused businesse
Slide 26: Appendices
INTERNAL USE ONLY APPENDICES
Slide 27: Profit after tax and exceptional items of €853m in 3Q 2022
R E C O N C I L I AT I O N B E T W E E N P R E - E X C E P T I O N A L O P E R AT I N G R E S U LT A N D P O S T - E X C E P T I O N A L R E S U LT A F T E R TA X Profit after tax and exceptional items of €853m in 3Q 2022 €m 3Q 2022 3Q 2021* Operating result (pre exceptional) 1,206 -485 Exceptional
Slide 28: 3Q and 9M 2022 traffic and capacity statistics vs 2019 - Group
Quarter Year to date Group performance 3Q 2022 3Q 2019 v3y 9M 2022 9M 2019 v3y Passengers carried ('000s) 29,535 34,562 -14.5% 69,504 90,448 -23.2% Domestic (UK & Spain) 7,714 8,067 -4.4% 18,997 21,442 -11.4% GROUP PERFORMANCE Europe 15,969 18,997 -15.9% 36,031 48,309 -25.4% North America 3,141 3,56
Slide 29: 3Q and 9M 2022 traffic and capacity statistics vs 2021 - Group
Quarter Year to date Group performance 3Q 2022 3Q 2021 vLY 9M 2022 9M 2021 vLY Passengers carried ('000s) 29,535 15,475 +90.9% 69,504 23,555 +195.1% Domestic (UK & Spain) 7,714 6,524 +18.2% 18,997 10,714 +77.3% GROUP PERFORMANCE Europe 15,969 7,053 +126.4% 36,031 9,499 +279.3% North America 3,141 64
Slide 30: 3Q and 9M 2022 traffic and capacity statistics vs 2019 - by airline
Quarter Year to date Performance by airline 3Q 2022 3Q 2019 v3y 9M 2022 9M 2019 v3y Passengers carried ('000s) 2,982 3,590 -16.9% 6,672 9,041 -26.2% Revenue passenger km (m) 6,980 7,782 -10.3% 14,850 19,033 -22.0% AIRLINE PERFORMANCE Available seat km (m) 8,026 8,925 -10.1% 19,221 23,123 -16.9% Pass
Slide 31: 3Q and 9M 2022 traffic and capacity statistics vs 2021 - by airline
Quarter Year to date Performance by airline 3Q 2022 3Q 2021 vLY 9M 2022 9M 2021 vLY Passengers carried ('000s) 2,982 786 +279.4% 6,672 1,011 +559.9% Revenue passenger km (m) 6,980 1,354 +415.5% 14,850 1,668 +790.3% AIRLINE PERFORMANCE Available seat km (m) 8,026 2,416 +232.2% 19,221 4,218 +355.7% Pa
Slide 32: Disclaimer
INTERNAL USE ONLY DISCLAIMER Forward-looking statements: Certain statements included in this announcement are forward-looking. These statements can be identified by the fact that they do not relate only to historical or current facts. By their nature, they involve risk and uncertainties because they
International Consolidated Airlines Group — Q3 2022 Earnings Presentation on 6ix