International Consolidated Airlines Group Sa · LSE:IAG
International Consolidated Airlines Group Sa — Q1 2020 Earnings Presentation
24 slides from International Consolidated Airlines Group Sa's earnings presentation, May 9, 2020
Slide 1: IAG results presentation Quarter One 2020
IAG results presentation Quarter One 2020 7 May 2020
Slide 2: Highlights
Highlights Willie Walsh, Chief Executive Officer
Slide 3: Substantial loss from March due to COVID-19
Substantial loss from March due to COVID-19 Highlights and outlook • Unusual quarterly pre-exceptional operating loss of €535m compared to a profit of €135m last year • The first two months were slightly loss-making but similar to last year despite the suspension of flights to China from the end of
Slide 4: Financial results and update
Financial results and update Steve Gunning, Chief Financial Officer
Slide 5: Significant loss due to sudden revenue decline
Significant loss due to sudden revenue decline 1Q 2020 financial summary OPERATING PROFIT TOTAL UNIT REVENUE PAX UNIT REVENUE -€535m -6.5% -7.7% (reported before exceptional) (constant currency) (constant currency) -€602m (constant currency vly) -3.3% (reported) -4.5% -€670m (€141m translation benef
Slide 6: Exceptional fuel charge due to 'over-hedging'
Exceptional fuel charge due to ‘over-hedging’ 1Q 2020 fuel cost • There have been two consequences as a result of the COVID-19 crisis • Price - jet fuel prices have fallen sharply since the start of the year from c.$650/mt to well below $200/mt • Volume – passenger capacity has been reduced signific
Slide 7: Going into the crisis our balance sheet and cash liquidity were strong
Going into the crisis our balance sheet and cash liquidity were strong Leverage and cash liquidity €m March 2020 December 2019 Gross debt 14,453 14,254 Cash, cash equivalents & interest-bearing deposits 6,945 6,683 On balance sheet net debt 7,508 7,571 Net debt / EBITDA 1.6x 1.4x Cash (% of last 12
Slide 8: Robust liquidity maintained in the short term
Robust liquidity maintained in the short term Cash and cash equivalents, interest bearing deposits and undrawn general and committed aircraft finance facilities Liquidity position Management actions €10.0bn €9.5bn • $1.38bn British Airways RCF €8.6bn extended in March 2020 2.5 3.6 1.9 • £0.3bn of co
Slide 9: Cash operating costs more than halved
Cash operating costs more than halved Short-term operating cost reduction Operating cash costs per week - April and May Management actions • Furlough of crew and staff Regular flying programme €440m • UK Job Retention Scheme • Spain ERTE -55% • Ireland Wage Subsidy Scheme • Salary reductions and con
Slide 10: 2020 capex reduced by €1.2bn and largely financed
2020 capex reduced by €1.2bn and largely financed 2020 capex plan update Gross Capex 2020 – Fleet vs non-fleet (%) Management actions Fleet Uncommitted Non-fleet Agreed Committed • 2020 capex reduction of €1.2bn to €3.0bn €4.2bn (of which €0.7bn spent in Q1) 16% -€1.2bn • Fleet plans reflect latest
Slide 11: Fleet deliveries expected to be reduced by 68 between 2020 and 2022
Fleet deliveries expected to be reduced by 68 between 2020 and 2022 2021 and 2022 fleet actions Fleet deliveries – long-haul vs short-haul fleet (aircraft) Management actions • Total fleet deliveries expected to be reduced by SH SH 68 aircraft between 2020 and 2022 LH LH • Accelerated planned retire
Slide 12: Outlook
Outlook Willie Walsh, Chief Executive Officer
Slide 13: Preparations are underway to return to service
Preparations are underway to return to service Preparations to return to service • Most of IAG’s 595 aircraft are currently grounded • Our preference is to operate new generation (e.g. A350/B787) and appropriately-sized aircraft on limited passenger, repatriation and cargo-only flights • We are plan
Slide 14: Consultation on restructuring at British Airways
Consultation on restructuring at British Airways UK labour legislation • The Job Retention Scheme confirms that redundancies can take place despite the scheme and also says the normal employment laws continue to apply • The obligation to collectively consult on redundancies arises from the Trade Uni
Slide 15: Current planning scenario c.50% capacity cut in 2020 for all IAG airlines
Current planning scenario c.50% capacity cut in 2020 for all IAG airlines 2020 current capacity planning scenario 1Q 2020 2Q 2020 3Q 2020 4Q 2020 FY 2020 British Airways contribution Iberia contribution Vueling contribution Aer Lingus contribution LEVEL contribution -10.5% -90% -55% -30% -50% IAG gr
Slide 16: Guidance for FY 2020
Guidance for FY 2020 As announced on February 28, 2020, given the uncertainty on the impact and duration of COVID-19, IAG is not currently providing profit guidance for 2020. However, as announced on 28th April, the Group expects its operating loss before exceptional items in the second quarter to b
Slide 17: IAG will come out of this crisis as a stronger Group
IAG will come out of this crisis as a stronger Group Strategic highlights • Our business and industry is facing an unprecedented challenge from COVID-19 that will have a long lasting impact • Going into this crisis our balance sheet and cash liquidity were strong • Total liquidity position of €10.0b
Slide 18: Appendices
Appendices IAG INTERNATIONAL, ROUP
Slide 19: All regions negatively impacted
All regions negatively impacted 1Q 2020 revenue performance by region Domestic Domestic -7.5% -6.1% North America North America -9.5% Europe -14.8% Europe -17.7% -6.1% ASK PRASK -10.5% -7.7% Asia Asia Pacific Pacific -18.7% Latin America -17.2% Latin America & Caribbean & Caribbean -4.4% AMESA -1.9%
Slide 20: Increase in unit cost due to the speed of capacity reduction
Increase in unit cost due to the speed of capacity reduction 1Q 2020 unit cost performance 1Q 2019 1Q 2020 % vly reported unit costs reported unit costs % vly constant currency (€ cents) (€ cents) Employee 1.60 1.83 +14.5% +11.4% Supplier 2.75 3.12 +13.4% +5.9% Airline non-fuel Ownership 0.68 0.84 +
Slide 21: RoIC impacted by 1Q 2020 performance
RoIC impacted by 1Q 2020 performance Financial target tracker: profitability trend by airline Op. margin: 1Q 2020 (11.7)% Op. margin trend vly -14.2pts Nml. margin: last 4Qs 9.2% RoIC: last 4Qs 11.4% 6% 9% Op. margin: 1Q 2020 (29.6)% Op. margin: 1Q 2020 (7.5)% Op. margin trend vly -20.2pts Op. margi
Slide 22: Traffic and capacity statistics – 1Q 2020
Traffic Traffic and and capacity statistics –– February capacity statistics 1Q 2020 2020 Group performance 1Q 2020 2019 yoy Passengers carried (’000s) 19,877 24,382 -18.5% Domestic 5,023 5,921 -15.2% Europe 9,582 12,406 -22.8% North America 2,072 2,482 -16.5% Latin America & Caribbean 1,435 1,475 -2
Slide 23: Traffic and capacity statistics – 1Q 2020 by airline
Traffic and capacity statistics – 1Q 2020 Performance by airline 1Q 2020 2019 yoy Passengers carried (’000s) 1,669 2,196 -24.0% Revenue passenger km (m) 3,338 4,255 -21.6% Available seat km (m) 5,277 5,804 -9.1% Passenger load factor (%) 63.3 73.3 -10.0 pts Cargo tonne km (m) 42 39 7.7% Passengers c
Slide 24: Disclaimer
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 relate to events
International Consolidated Airlines Group — Q1 2020 Earnings Presentation on 6ix