International Consolidated Airlines Group Sa · LSE:IAG
International Consolidated Airlines Group Sa — H1 2024 Earnings Presentation
37 slides from International Consolidated Airlines Group Sa's earnings presentation, August 2024
Slide 1: Connecting people, businesses and countries
Connecting people, businesses and countries 2024 Half Year results 1
Slide 2: Disclaimer
Disclaimer LEI: 959800TZHQRUSH1ESL13 Forward-looking statements: Certain statements included in this document and any related conference call or webcast (including any related Q&A session) are forward-looking. These statements can be identified by the fact that they do not relate only to historical
Slide 3: Highlights
Highlights Luis Gallego Chief Executive Officer 2024 Half Year results
Slide 4: Delivering on our strategy to maximise shareholder returns
Delivering on our strategy to maximise shareholder returns • A strong performance for H1 2024 – increase in operating profit of €49m to €1,309m (2023: €1,260m) • Continuing strong demand for travel delivers positive unit revenue growth • Our portfolio of core markets and airline brands continues to
Slide 5: Our strategy to deliver world-class margins and returns
Our strategy to deliver world-class margins and returns STRATEGIC IMPERATIVES MEDIUM-TERM AMBITION 12-15% A strong core Operating Margin Sustainable profitability 13-16% ROIC Capital-light earnings growth +4-5%* Organic ASK Growth Accretive A robust financial and growth <1.8x sustainability framewor
Slide 6: Financial results
Financial results Nicholas Cadbury Chief Financial Officer 2024 Half Year results 6
Slide 7: Our key metrics for H1 2024
Our key metrics for H1 2024 ASKs 165,653m Activity +7.5% vLY Total revenue Total pax revenue PRASK Load factor €14,724m €13,043m €7.87c 85.0% Commercial +8.4% vLY +10.7% vLY +2.9% vLY +0.9pts vLY performance Total expenditure CASK Fuel CASK Non-fuel CASK €13,415m €8.10c €2.30c €5.80c Cost +8.9% vLY
Slide 8: BA margin improving; strong Spain; Aer Lingus impact from strikes and trading
BA margin improving; strong Spain; Aer Lingus impact from strikes and trading H1 2024 H1 2024 H1 2024 H1 2024 H1 2024 - vLY vLY vLY vLY vLY (€m) (£m) (€m) (€m) (£m) Total revenue 1,053 +3.2% 6,736 +5.4% 3,490 +7.5% 1,483 +4.0% 1,095 +23.3% Passenger revenue 1,017 +3.5% 6,309 +6.2% 2,722 +14.1% 1,475
Slide 9: Continuing strong trading in our core markets
Continuing strong trading in our core markets North America Europe % v23 ASKs PRASK % v23 ASKs PRASK Q2 +6.1% +2.0% Q2 +5.8% +1.0% H1 +3.6% +4.0% H1 +7.2% +2.6% 31% of Group H1 ASKs 25% of Group H1 ASKs Asia Pacific % v23 ASKs PRASK Total Q2 +31.7% (14.5)% % v23 ASKs PRASK Q2 +8.0% +1.8% Domestic H1
Slide 10: Profit after tax and exceptional items of €905m in H1 2024
Profit after tax and exceptional items of €905m in H1 2024 Six months to June 30 Before Before Exceptional Exceptional €m exceptional Statutory 2024 exceptional Statutory 2023 items items items 2024 items 2023 Revenue 14,724 - 14,724 13,583 - 13,583 Operating costs 13,415 - 13,415 12,323 - 12,323 Op
Slide 11: Planned increase in non-fuel costs due to investment in operations and fleet
Planned increase in non-fuel costs due to investment in operations and fleet Cost H1 2024 H1 2024 CASK (% vly) FY 2024 category Impacted by timing of wage settlements agreed in Employee +4.8% H2 2023 • Non-fuel CASK expected to increase slightly year on year – as previously guided Benefitting from t
Slide 12: Significant increase in free cash flow at June 2024
Significant increase in free cash flow at 30 June 2024 H1 2023 H1 2024 FY 2024 (€m) (€m) Operating profit 1,260 1,309 ASK growth around 7% in 2024 Depreciation 983 1,140 Increasing as investment increases Benefit of revenue growth and seasonality, expected to unwind Working capital 2,291 2,266 in H2
Slide 13: Cash bridge Dec-23 to June-24
Cash bridge Dec-23 to June-24 €m +€2,861m Free cash flow of €3,170 million Repayment of lease liabilities 2,583 (148) (303) (1,411) 520 (216) (466) 426 (626) 53 9,698 2,449 6,837 Actual cash EBITDA Deferred Other WC and Net interest Gross capex Proceeds Proceeds Repayment of Repayment Repayment Fore
Slide 14: Strong financial position
Strong financial position €m 30 Jun 2023 31 Dec 2023 30 Jun 2024 Gross debt 19,623 16,082 16,115 of which bank and other loans 6,472 2,688 2,679 of which asset financed and lease liabilities 13,151 13,394 13,436 Cash, cash equivalents and interest-bearing deposits 12,010 6,837 9,698 Net debt 7,613 9
Slide 15: Disciplined investment for sustainable growth and returns
Disciplined investment for sustainable growth and returns Gross capital expenditure ETS credits now removed from capex and disclosed within ‘other assets’ operating cash flow1 c.€4bn Full year 2024 gross capex guidance updated: c.€3.3bn excluding ETS; SLB proceeds of €0.6bn expected c.€3.3bn Propert
Slide 16: Capital allocation to support profitable growth, margins and sustainable shareholder returns
Capital allocation to support profitable growth, margins and sustainable shareholder returns Maintain balance sheet strength (<1.8x across the cycle) 1.1x at 30 June 2024 Invest in rebuilding our fleet 9 new aircraft in H1 Improve customer experience, digital and sustainability BA OTP +15%pts in H1
Slide 17: Business update and outlook
Business update and outlook Luis Gallego Chief Executive Officer 2024 Half Year results 17
Slide 18: A successful strategic framework
A successful strategic framework A strong core Capital-light earnings A robust financial Strategic growth and sustainability Imperatives framework Performing disciplined Growing our portfolio of Developing IAG Loyalty capital allocation and global leadership positions balance sheet management Strate
Slide 19: Building our margins and return on capital
Building our margins and return on capital MEDIUM-TERM AMBITION Transforming all our businesses to reach 12-15% IMPROVING LEVERAGING GROWING IAG Operating Margin their full potential BRITISH AIRWAYS OUR SPANISH LOYALTY PLATFORMS Leveraging Loyalty for higher growth, high 13-16% margins and sustainab
Slide 20: Balanced portfolio of core markets is a competitive advantage
Growing global leadership positions Balanced portfolio of core markets is a competitive advantage North Atlantic Latin America Intra-Europe #1 long-haul market from #1 revenue growing market Domestic Spain is #1 domestic Europe by size (€38bn1 market) from Spain (+54% vs 2019) market in Europe and E
Slide 21: Disciplined capital allocation to core markets
Growing global leadership positions Disciplined capital allocation to core markets North Atlantic Latin America Intra-Europe • Launch of Dublin to Minneapolis and • New routes to Dalaman, Catania and Denver Heraklion • 50% increase in flights to Sao Paolo • Doubling of flights to San Diego and • New
Slide 22: Engaging with our people is critical to our success
Strengthening world-class brands Engaging with our people is critical to our success Continued strength of our brands in attracting talent: we recruited c.7k employees in the first half of 2024 Investing in service and resilience, while restoring capacity to above 2019 levels: average headcount has
Slide 23: More efficient operations delivering better punctuality
Strengthening world-class brands More efficient operations delivering better punctuality OTP (D´15) 79.1% 75.5% 78.9% 82.4% 76.9% 72.1% 72.7% 70.1% 61.4% OTP (D´15) 63.7% 59.3% 60.3% 2023 2024 Q1 Q2 H1 2023 2024 Q1 Q2 H1 • British Airways’ focus on improving operational performance and resilience is
Slide 24: Investing in our customers' experience
Strengthening world-class brands Investing in our customers’ experience Journey Dreaming, planning & Road to hub Check in Lounge Boarding On-board Disruption, connections & Our service booking arrivals TSA pre-check Self-service during Customer First Lounge refresh at available from US delay & disru
Slide 25: BA Holidays adds further value to IAG Loyalty platform
Developing IAG Loyalty BA Holidays adds further value to IAG Loyalty platform IAG Loyalty now incorporates BA Holidays H1 Operating Profit Loyalty Highlights £193m • +23.5% higher Avios issued than prior year £170m • +13% more active customers than H1 2023 £102m • +22% more customers redeeming Avios
Slide 26: Remaining focused on our sustainability goals
Leading transition to Net Zero Remaining focused on our sustainability goals In February, IAG signed its largest-ever SAF purchase agreement with Twelve World’s first commercial-scale alcohol-to-jet SAF from LanzaJet New large-scale SAF supply from Repsol, EcoCeres and St1 Received FlightGlobal’s Ai
Slide 27: Positive outlook for 2024
Positive outlook for 2024 • Continuing strong demand for travel across our core markets • ASK capacity increase focused on our core markets – FY remains the same at 7%. Q3 2024 +7% • FY 2024 NF CASK as previously guided - to increase slightly • Expect to generate significant free cash flow and maint
Slide 28: Summary
Summary • We remain confident in the long-term prospects of our business, with a strong performance in the first half of 2024 • Demand remains strong, whilst supply is constrained for the medium term • Transformation programme is going well, securing customer, operational and financial benefits • Fo
Slide 29: Appendices
Appendices 29
Slide 30: Our Q2 key metrics
Our Q2 key metrics ASKs 88,969m Activity +8.0% vLY Total revenue Total pax revenue PRASK Load factor €8,295m €7,411m €8.33c 86.7% Commercial +7.8% vLY +9.9% vLY +1.8% vLY +0.3pts vLY performance Total expenditure CASK Fuel CASK Non-fuel CASK €7,054m €7.93c €2.28c €5.65c Cost +9.5% vLY +1.4% vLY +4.6
Slide 31: H1 operating profit bridges
H1 operating profit bridges €m IAG operating profit bridge by driver IAG operating profit bridge by business €m +49 +49 (37) (81) (10) 1 (24) (31) 33 1,309 (806) 80 1,259 1,260 (264) 1,309 1,260 (22) H1-23 Pax Cargo Other NF cost Fuel cost Currency H1-24 H1-23 BA € IB (excl. VY EI IAG Other H1-24 re
Slide 32: FY 2024 capacity planned to be c.7% higher than 2023
FY 2024 capacity planned to be c.7% higher than 2023 Airline contribution to IAG Airline contribution to total IAG ASKs Q3 2024 FY 2024 vLY vLY ASK growth by quarter vLY ASK growth for FY 2024 vLY +7% +8% +7% +7% +7% +5% +4% +6% +6% +13% +14% +35% +19% +1% +2% +7% +7% Q1-24 Q2-24 Q3-24 Q4-24 FY-24 N
Slide 33: Fuel hedging - c.74% for the remainder of 2024
Fuel hedging - c.74% for the remainder of 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Jet fuel price scenario $840/mt $840/mt $815/mt $815/mt $815/mt $815/mt $/€ scenario 1.072 1.072 1.072 1.072 1.072 1.072 Hedge ratio 76% 71% 60% 51% 41% 33% Effective blended price post fuel and FX hedging
Slide 34: Group performance
Q2 2024 traffic and capacity statistics vs 2023 Group performance 2024 Half Year results 34
Slide 35: Performance by airline
Q2 2024 traffic and capacity statistics vs 2023 Performance by airline 2024 Half Year results 35
Slide 36: Alternative Performance Measures (APMs) and Financial terminology definitions
Alternative Performance Measures (APMs) and Financial terminology definitions Measure IFRS/APM Definition Source of calculation Operating profit (and other Income statement APM See Q2 2024 Interim Management Statement (alternative performance measures Q2 2024 Interim Management Report (Reconciliatio
Slide 37: Connecting people, businesses and countries
Connecting people, businesses and countries 2024 Half Year results 37
International Consolidated Airlines Group — H1 2024 Earnings Presentation on 6ix