International Consolidated Airlines Group SA · LSE:IAG
International Consolidated Airlines Group SA — Q2 2021 Earnings Presentation
37 slides from International Consolidated Airlines Group SA's earnings presentation, Jul 30, 2021
Slide 1: IAG Results Quarter Two 2021
IAG RESULTS QUARTER TWO 2021 30 July 2021
Slide 2: Highlights
HIGHLIGHTS LU I S G A L L EGO, CHI E F E X ECU TI VE OF F I CE R
Slide 3: Taking action to manage the recovery from the pandemic
2Q 2021 HIGHLIGHTS 2Q 2021 HIGHLIGHTS AND OUTLOOKAND OUTLOOK Taking action to manage the recovery from the pandemic 3
Slide 4: Cash performance better than previous quarters
INTERNAL USE ONLY 2Q 2021 HIGHLIGHTS AND OUTLOOK Cash performance better than previous quarters -€1.0bn €10.8bn Pre exceptional Strong liquidity of €10.8bn operating loss at end June (pro-forma) after several liquidity actions taken year to date Significant improvement in operating cash flow in 2Q v
Slide 5: Significant actions taken by all operating companies
INTERNAL USE ONLY 2Q 2021 HIGHLIGHTS AND OUTLOOK Significant actions taken by all operating companies to address their individual challenges Stepping-up Ongoing cost reduction Benefiting from Positive operating Continuing to Continuing restructuring and efforts following 2020 operating a cash flow i
Slide 6: Confident of a meaningful recovery in demand from 3Q
2Q 2021 HIGHLIGHTS AND OUTLOOK Confident of a meaningful recovery in demand from 3Q • Raising capacity in 3Q to c.45% of 2019 levels • Operationally ready to fly up to c.75% in 4Q to take advantage of a later summer leisure season • Widespread evidence of pent-up demand: US point of sale; longhaul V
Slide 7: Financial Results
FINANCIAL RESULTS ST E VE G UN N ING, CHI E F F I N A N CIA L OF F I CE R
Slide 8: Liquidity remains strong despite loss
2Q 2021 FINANCIAL HIGHLIGHTS Liquidity remains strong despite loss 1Q 2021 2Q 2021 1Q 201Q 1Q 21 2Q 20 2Q 2Q 21 45.8% 51.8% RPK, ASK -34.9pts -33.2pts Pre exceptional -0.5 Load Factor operating result (vs 2019) (€bn) -78.1% -1.0 -80.4% -1.1 -88.9% -86.7% -1.4 RPKs ASKs Load Factor Gross debt Net deb
Slide 9: Continued losses due to COVID-19 travel restrictions
2 Q 2 0 2 1 O P E R AT I N G R E S U LT INTERNAL USE ONLY Continued losses due to COVID-19 travel restrictions 2Q 2021 2Q 2020 2Q 2019 v2y Passenger revenue 682 198 5,963 -88.6% Cargo revenue 419 369 281 49.1% Other revenue 143 174 487 -70.6% Total revenue 1,244 741 6,731 -81.5% Employee costs 666 6
Slide 10: Spanish carrier outperformance due to fewer COVID-19 restrictions
2 Q 2 0 2 1 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 INTERNAL USE ONLY Spanish carrier outperformance due to fewer COVID-19 restrictions 2Q 2021 (€m) v2y 2Q 2021 (£m) v2y 2Q 2021 (€m) v2y 2Q 2021 (€m) v2y Passenger revenue 22 -96.3% 203 -93.5% 274 -73.2% 146 -78.6% Cargo re
Slide 11: Strong cash position throughout the period
1H 2021 CASH BRIDGE Strong cash position throughout the period (€m) €1,747m 4,455 (517) (685) (264) c.30% forex 7,664 exchange positive impact 5,917 (1,260) 906 (239) (197) (108) (232) (300) 188 Cash H1 EBITDA Deferred Other WC & Realised Pension & Net interest Gross capex Proceeds Proceeds Repaymen
Slide 12: Liquidity position remains higher than before the COVID-19 crisis
LIQUIDITY INTERNAL USE ONLY Liquidity position remains higher than before the COVID-19 crisis Liquidity position Liquidity actions Cash + Facilities (% of 2019 revenue) 1Q 2021 36% 37% 32% 26% 32% 41% 42% • £2.0bn UKEF guaranteed 5-year loan facility drawdown by British Airways €10.5bn* €10.8bn • €7
Slide 13: €500m increase in net debt in 2Q
DEBT POSITION INTERNAL USE ONLY €500m increase in net debt in 2Q €m 30 Jun 2021 31 Mar 2021 31 Dec 2020 31 Dec 2019 Gross debt 19,771 19,539 15,679 14,254 Bank and other loans 7,440 6,948 3,369 1,954 Asset finance and lease liabilities 12,331 12,591 12,310 12,300 Cash, cash equivalents and interest-
Slide 14: Minimal debt repayment until convertible bond due in November 2022
F I N A N C I A L D E B T M AT U R I T Y P R O F I L E 2 0 2 1 - 2 0 2 9 INTERNAL USE ONLY Minimal debt repayment until convertible bond due in November 2022 €2,764m c.€400m ICO loan moved from previous years €330m CCFF repaid in April 2021 €862m €810m €825m €700m €626m €571m €274m €39m 2021 2022 20
Slide 15: Weekly cash operating costs expected to rise as capacity resumes
W E E K LY C A S H O P E R AT I N G C O S T E V O L U T I O N INTERNAL USE ONLY Weekly cash operating costs expected to rise as capacity resumes €270m €215m €205m €205m €190m 18 €175m 12 7 Cargo-driven 15 flight costs 16 193 198 197 159 175 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021e Excl cargo
Slide 16: CEO Update & Outlook
CEO UPDATE & OUTLOOK LU I S G A L L EGO, CHI E F E X ECU TI VE OF F I CE R
Slide 17: Management taking significant actions to address individual challenges
MANAGEMENT ACTIONS Management taking significant actions to address individual challenges • Manchester base to open September 2021: UK AOC approved, largely variable cost base, code-share with British Airways • Progressing integration into Atlantic Joint Business • Replacement of Stobart Air on regi
Slide 18: Management taking significant actions to address individual challenges
MANAGEMENT ACTIONS Management taking significant actions to address individual challenges • Repositioning the network to adapt to changes in restrictions (e.g. US/Canada to/from Europe and West Africa, UK to Caribbean) • Planning to ramp-up from 150 flights per day in early June to 340 in late Augus
Slide 19: Management taking significant actions to address individual challenges
MANAGEMENT ACTIONS Management taking significant actions to address individual challenges • Running the airline operation at a relatively high level of capacity (e.g. Latin America and Spain domestic) benefitting revenue and unit cost • Iberia Express profitable in 2Q • Optimising the network throug
Slide 20: Management taking significant actions to address individual challenges
MANAGEMENT ACTIONS Management taking significant actions to address individual challenges • Exploiting demand opportunities where government restrictions are lifted, ramping-up domestic Spain capacity above 2019 levels by July and launching 42 new routes • Positive cash generation in 2Q • Maximising
Slide 21: Management taking significant actions to address individual challenges
MANAGEMENT ACTIONS Management taking significant actions to address individual challenges • Cargo-only flights 2Q 1,371 and 1H 2,677 • Co-sponsored flights with passenger business more than offset reduction in cargo-only flights • Large charter programmes with strategic customers replacing ad-hoc ch
Slide 22: Management taking significant actions to address individual challenges
MANAGEMENT ACTIONS Management taking significant actions to address individual challenges • Profitable and cash generative throughout the pandemic (customers still spending on non-airline partners) • Customer spend on UK co-branded credit card higher in June than 2019 due to more customers and growt
Slide 23: Accelerating digital initiatives to facilitate travel during and post COVID-19
INTERNAL USE ONLY D I G I TA L I N I T I AT I V E S Accelerating digital initiatives to facilitate travel during and post COVID-19 Digital solutions to Digital heat maps reduce passenger to facilitate travel airport processing by destination time https://www.vueling.com/en/help-to-travel/travel-rest
Slide 24: Widespread evidence of pent-up demand across regions
INTERNAL USE ONLY W E E K LY N E W PA S S E N G E R B O O K I N G I N TA K E S Widespread evidence of pent-up demand across regions Spain domestic International shorthaul Longhaul vs. 2019 (5 Jan 20 – 25 Jul 21) vs. 2019 (5 Jan 20 – 25 Jul 21) vs. 2019 (5 Jan 20 – 25 Jul 21) 120% 120% 120% 2 May 2 M
Slide 25: Strong point of sale USA demand following EU restriction removal
U S P O I N T O F S A L E W E E K LY N E W PA S S E N G E R B O O K I N G I N TA K E S Strong point of sale USA demand following EU restriction removal vs. 2019 (8 Mar 20 – 25 Jul 21) British Airways intakes from POS 100% USA increase by 95% over previous 5 day average on 28 July afternoon after UK
Slide 26: Amber list country bookings have grown since UK policy change announced
INTERNAL USE ONLY B R I T I S H A I R W AY S I N TA K E S Amber list country bookings have grown since UK policy change announced Intakes all travel months (Jul-Dec) Intakes by travel month between 8 and 11 July between 8 and 11 July Substantial increase in bookings for travel Amber bookings have gr
Slide 27: BA shorthaul peak summer holiday schedule larger than in summer 2019
INTERNAL USE ONLY B R I T I S H A I R W AY S S U M M E R 2 0 2 1 S C H E D U L E BA shorthaul peak summer holiday schedule larger than in summer 2019 ASKs (bn) - Shorthaul peak holiday routes ASKs vs. S19 (%) - Shorthaul peak holiday routes Capacity to most popular shorthaul destinations Larger peak
Slide 28: Ready to operate up to a maximum of c.75% capacity by 4Q 2021
INTERNAL USE ONLY O P E R AT I O N A L R E A D I N E S S Ready to operate up to a maximum of c.75% capacity by 4Q 2021 Aircraft readiness Crew readiness 4Q max capacity (as % of 2019) • Longhaul: • Pilots: Due to low level of flying 82% ready to fly. Pace of ramp • 5% fewer aircraft than 2019 (and s
Slide 29: Continuing to lead the airline industry on tackling climate change
S U S TA I N A B I L I T Y Continuing to lead the airline industry on tackling climate change IAG upgraded by the CDP (Carbon Disclosure Iberia and Repsol agreement that includes Project) to A- in recognition of our carbon development of Sustainable Aviation Fuels (SAF), management strategy. IAG is
Slide 30: Confident of a meaningful recovery in demand
INTERNAL USE ONLY OUTLOOK Confident of a meaningful recovery in demand In the short term our focus is on Some positive government actions More government action required ensuring operational readiness for to reduce travel restrictions to enable travel a recovery in demand • Group capacity expected t
Slide 31: Set to emerge from COVID-19 in a stronger competitive position
INTERNAL USE ONLY CONCLUSIONS Set to emerge from COVID-19 in a stronger competitive position Significant improvement Liquidity is strong IAG and its airlines have in operating cash flow in devoted significant resources 2Q vs previous quarters to ensure that when demand returns we are able to capital
Slide 32: Appendices
APPENDICES
Slide 33: Some progress on governments actions but more needed
G O V E R N M E N T A C T I O N S R EQ U I R E D TO O P E N T R AV E L Some progress on governments actions but more needed Enabler Required actions Progress • Harmonised EU roadmap to air travel re-start • Coordinated approach to restriction of free movement within the EU/external arrivals required
Slide 34: Net loss of c.€1.0bn in the second quarter
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 Net loss of c.€1.0bn in the second quarter €m 2Q 2021 2Q 2020 Operating result (pre exceptional) -1,045 -1,370 Exceptional items 78 -812 Oper
Slide 35: 2Q 2021 traffic and capacity statistics
Quarter Group performance 2Q 2021 2Q 2020 vLY 2Q 2019 vLY Passengers carried ('000s) 5,468 508 +976.4% 31,504 -82.6% Domestic (UK & Spain) 2,934 254 +1055.1% 7,454 -60.6% Europe 1,779 147 +1110.2% 16,906 -89.5% GROUP PERFORMANCE North America 169 51 +231.4% 3,487 -95.2% Latin America & Caribbean 357
Slide 36: 2Q 2021 traffic and capacity statistics
Quarter Performance by airline 2Q 2021 2Q 2020 vLY 2Q 2019 vLY Passengers carried ('000s) 143 60 +138.3% 3,255 -95.6% Revenue passenger km (m) 190 77 +146.8% 6,996 -97.3% Available seat km (m) 919 836 +9.9% 8,394 -89.1% AIRLINE PERFORMANCE Passenger load factor (%) 20.7 9.2 +11.5 pts 83.3 -62.6 pts
Slide 37: Disclaimer
DI S CL A IMER 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 eve
International Consolidated Airlines Group (IAG) — Q2 2021 Earnings Presentation on 6ix