International Consolidated Airlines Group Sa · LSE:IAG
International Consolidated Airlines Group Sa — H1 2023 Earnings Presentation
40 slides from International Consolidated Airlines Group Sa's earnings presentation, Jul 28, 2023
Slide 1: Connecting people, businesses and countries
Connecting people, businesses and countries 2023 Half One 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 2023 Half One results
Slide 4: Record first half profit driven by continued strong demand
H1 2023 Highlights Record first half profit driven by continued strong demand • Record H1 profit driven by a strong trading performance across the Group • Group operating profit before exceptional items of €1,260m (vs H1 2022: operating loss -€446m) • Sustained strong demand driving positive unit re
Slide 5: Financial results
Financial results Nicholas Cadbury Chief Financial Officer 2023 Half One results
Slide 6: Continuing strong performance across the Group
H1 2023 Financial results Continuing strong performance across the Group IAG Operating result bridge IAG Operating result bridge by business €m €m +1,706 +1,706 -240 292 122 8 15 1,260 154 -1613 370 1,038 4180 -984 1260 71 (446) H1-22 Pax Cargo Other Non-fuel Fuel cost Currency H1-23 (446) revenue r
Slide 7: Our H1 key metrics
H1 2023 Financial results Our H1 key metrics ASKs 154,034m Activity 30.9% vH1-22 20.0% vQ2-22 Total pax revenue Pax RASK Load factor €11,784m €7.65c 84.1% Commercial 55.0% vH1-22 18.4% vH1-22 6.3pts vH1-22 performance 36.2% vQ2-22 13.5% vQ2-22 4.6pts vQ2-22 Total expenditure Total CASK Fuel CASK Non
Slide 8: Particular outperformance from Iberia and IAG Loyalty
H1 2023 Financial results Particular outperformance from Iberia and IAG Loyalty H1 2023 H1 2023 H1 2023 H1 2023 H1 2023 vLY vLY vLY vLY vLY (€m) (£m) (€m) (€m) (£m) Total revenue 1,019 +53.5% 6,716 +51.2% 3,246 +41.3% 1,426 +45.9% 562 +48.6% Passenger revenue 983 +58.7% 5,939 +66.8% 2,385 +47.5% 1,4
Slide 9: Profit after tax and exceptional items of €921m in H1 2023
H1 2023 Financial results Profit after tax and exceptional items of €921m in H1 2023 Six months to June 30 Before Before Statutory Exceptional Statutory Exceptional €m exceptional items exceptional items 2023 items 2022 items 2023 2022 Revenue 13,583 - 13,583 9,351 - 9,351 Operating costs 12,323 - 1
Slide 10: Strong cash position driven by positive EBITDA and seasonal working capital
H1 2023 Financial results Strong cash position driven by positive EBITDA and typical seasonal working capital pattern €m +€2,411m 2,382 20 (47) (379) (1,284) 614 (1,199) (225) 253 2,243 33 12,010 9,599 Cash EBITDA Deferred Other WC Restructuring Net interest Gross capex Purchase of Proceeds Proceeds
Slide 11: Strong EBITDA and working capital improving net debt
H1 2023 Financial results Strong EBITDA and working capital improving net debt €m 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Dec 2022 30 Jun 2022 30 Jun 2023 Gross debt 14,254 15,679 19,610 19,984 20,169 19,623 Bank and other loans 1,954 3,369 7,485 6,546 7,160 6,472 Asset financed and lease liabilities
Slide 12: Manageable debt repayment schedule
H1 2023 Financial results Manageable debt repayment schedule €m 2,787 €2,787m €500m IAG bond repaid 4 July 2023 824 €825m825 700 534 €715m 571 €571m €700m 285 €285m 2023 2024 2025 2026 2027 2028 2029 Bonds issued by ICAG Other secured loans Other unsecured bonds and loans Floating rate ICO • €500 mi
Slide 13: Fuel hedging - c.67% for the remainder of 2023
H1 2023 Financial results Fuel hedging - c.67% for the remainder of 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Jet fuel price scenario $850/mt $850/mt $800/mt $800/mt $800/mt $800/mt $/€ scenario 1.09 1.09 1.09 1.09 1.09 1.09 Hedge ratio 69% 65% 58% 49% 39% 32% Effective blended price post
Slide 14: Our trading in Q2 2023 compared to Q2 2022
H1 2023 Financial results Our trading in Q2 2023 compared to Q2 2022 Europe North America ASKs (% v22) +10.4% ASKs (% v22) +20.8% PRASK (% v22) +18.1% Total PRASK (% v22) +11.9% Domestic Asia Pacific ASKs (% v22) +20.0% ASKs (% v22) +1.6% ASKs (% v22) +342.6% PRASK (% v22) +13.5% PRASK (% v22) +19.2
Slide 15: Trading outlook
H1 2023 Financial results Trading outlook • FY 2023 guidance • Customer demand remains strong across the Group, particularly for leisure customers, with c.80% of the third quarter passenger revenue already booked • We continue to expect capacity to be around 97% of pre-Covid levels, subject to disru
Slide 16: Business overview and outlook
Business overview and outlook Luis Gallego Chief Executive Officer 2023 Half One results
Slide 17: Generating long term shareholder value
Business update and outlook Generating long term shareholder value Unique structure Portfolio of world class brands Global leadership positions Efficiency and innovation Leading sustainability agenda Delivering high sustainable shareholder returns 2023 Half One results 17
Slide 18: Network investment in our strong hubs
Generating long term value – global leadership positions Network investment in our strong hubs London – North Atlantic Europe – South Atlantic ASK capacity share ASK capacity share Other AFKLM Air Canada Other 6% 6% British Airways 23% 20% Delta 7% 37% Avianca 3% 12% Air Caraibes 3% 19% United IAG T
Slide 19: Investment in fleet to support hub and customer strategy
Generating long term value – global leadership positions Investment in fleet to support hub and customer strategy Narrowbody fleet Widebody fleet 11% 43% New generation 20% 43% 6 40 41 40 7 38 37 41 13 4 37 - 4 123 129 37 122 124 4 14 125 117 122 124 12 - 12 10 - 125 117 6- 12 10 135 111 118 122 167
Slide 20: Investing to improve our operations
Generating long term value – efficiency and innovation Investing to improve our operations OTP OTP 63.6% 57.2% • Increased resourcing at Dublin to mitigate on-the-day • Recruited and trained 4,000 people ahead of the disruption summer • Increased check-in resource for high demand • Heathrow above 20
Slide 21: Investing in our customers' experience
Generating long term value – portfolio of world class brands Investing in our customers’ experience Lounges Digital Business class seats Food 2023 Half One results 21
Slide 22: Excellent momentum in Loyalty
Generating long term value – efficiency and innovation Excellent momentum in Loyalty Collection • 48% more Avios collected from non-air partners in H1 2023 than in H1 2019 Operating result • Record H1 American Express Remuneration of £286m, £m +76% vs 2019 • 55% more members utilising our online sho
Slide 23: Our people are central to our business
Generating long term value – leading sustainability agenda Our people are central to our business • 7,000 people recruited across the Group • Implementing pilot cadet schemes to support long term supply • Implementing resourcing, talent and succession strategies to achieve 40 per cent women in senio
Slide 24: Continuing to prioritise our sustainability initiatives
Generating long term value – leading sustainability agenda Continuing to prioritise our sustainability initiatives • IAG’s economic contribution: 600,000 jobs and €70bn added to EU and UK GDP (direct and indirect)* • Active involvement in UK and EU policy discussions: e.g. on mandate design and a pr
Slide 25: Summary
Generating long term value – summary and outlook Summary • A good start to the year as strong demand across our group has delivered record profit • Expect strong leisure demand to continue through the summer • We are committed to investing further in our customer propositions and operational perform
Slide 26: Appendices
Appendices 26
Slide 27: FY 2023 capacity planned to be c.97% of 2019 level
H1 2023 Financial results FY 2023 capacity planned to be c.97% of 2019 level ASKs Q3 2023 Q3 2023 FY 2023 FY 2023 vs 2022 % of 2019 vs 2022 % of 2019 IAG growth +46% +20% +19% +17% +24% vs 2022 +14% 103% +21% 105% +27% 94% +30% 91% Airlines contribution +17% 99% +19% 103% to growth +35% 143% +37% 13
Slide 28: Continuing strong performance across the Group (Q2)
Q2 2023 Financial results Continuing strong performance across the Group IAG Operating result bridge IAG Operating result bridge by business €m €m +956 +956 104 0 3 1,251 120 -131 115 215 -770 514 1,251 1,794 -144 92 295 295 Q2-22 Pax Cargo Other Non-fuel Fuel cost Currency Q2-23 Q2-22 BA € IB VY EI
Slide 29: Our key Q2 metrics (v2019 and v2022)
Q2 2023 Financial results Our key Q2 metrics (v2019 and v2022) ASKs 82,371m Activity (6.4)% v19 20.0% v22 Total pax revenue Pax PRASK Load factor €6,743m €8.19c 86.4% Commercial 13.1% v19 20.8% v19 1.4pts v19 performance 36.2% v22 13.5% v22 4.6pts v22 Total expenditure Total CASK Fuel CASK Non-fuel
Slide 30: Record second quarter profit
Q2 2023 Financial performance at Group level Record second quarter profit (€m) Q2 2023 Q2 2022* Q2 2019 vLY • Record operating profit of €1,251m (+€956m vs Q2-22) Passenger revenue 6,743 4,949 5,963 36.2% • Total revenue 30% higher than Q2-22 Cargo revenue 280 411 281 (31.9%) • Passenger revenue 36.
Slide 31: Aer Lingus strong quarter 2 performance
Q2 2023 Financial results Aer Lingus strong quarter 2 performance (€m) Q2 2023 Q2 2022* Q2 2019 vLY Passenger revenue 643 452 588 +42% Cargo revenue 15 21 13 (27)% Other revenue 3 2 4 +28% Total revenue 661 475 605 +39% Employee costs 126 105 105 +20% Fuel, oil costs and emissions charges 164 142 12
Slide 32: British Airways quarter 2 profit almost fully recovered
Q2 2023 Financial results British Airways quarter 2 profit almost fully recovered (£m) Q2 2023 Q2 2022* Q2 2019** v22 Passenger revenue 3,275 2,277 3,112 +44% Cargo revenue 183 266 180 (31)% Other revenue 216 194 172 +12% Total revenue 3,674 2,737 3,463 +34% Employee costs 632 498 666 +27% Fuel, oil
Slide 33: Iberia 17% operating margin in quarter 2
Q2 2023 Financial results Iberia 17% operating margin in quarter 2 (€m) Q2 2023 Q2 2022* Q2 2019 vLY Passenger revenue 1,331 976 1,021 +36% Cargo revenue 66 88 73 (24)% Other revenue 383 320 345 +20% Total revenue 1,780 1,384 1,439 +29% • Group operating profit +€215m vs Q2-22, positive across all b
Slide 34: Vueling strong results driven by strong demand and transformation
Q2 2023 Financial results Vueling strong results driven by strong demand and transformation (€m) Q2 2023 Q2 2022 Q2 2019 vLY Passenger revenue 898 714 681 +26% Cargo revenue - - - - Other revenue 4 3 5 +62% Total revenue 902 717 685 +26% Employee costs 102 87 76 +17% Fuel, oil costs and emissions ch
Slide 35: Group performance: traffic and capacity statistics vs 2022
H1 2023 traffic and capacity statistics vs 2022 Group performance Quarter Year to date Q2 2023 Q2 2022 vLY H1 2023 H1 2022 vLY Group performance Passengers carried ('000s) Domestic (UK & Spain) Europe 30,028 7,490 15,773 25,592 6,838 13,640 +17.3% +9.5% +15.6% 54,307 13,835 27,865 39,969 11,283 20
Slide 36: Group performance: traffic and capacity statistics vs 2019
H1 2023 traffic and capacity statistics vs 2019 Group performance Quarter Year to date Q2 2023 Q2 2019 v2019 H1 2023 H1 2019 v2019 Group performance Passengers carried ('000s) 10,350 11,274 -8.2% 54,307 55,886 -2.8% Domestic (UK & Spain) 2,557 2,659 -3.8% 13,835 13,375 +3.4% Europe 5,482 6,137 -10.
Slide 37: Group performance by airline vs 2022
Performance by airline Quarter Year to date Q2 2023 Q2 2022 vLY H1 2023 H1 2022 vLY H1 2023 traffic and capacity statistics vs 2022 Passengers carried ('000s) 3,059 2,541 +20.4% 5,054 3,690 +37.0% Revenue passenger km (m) 7,444 5,595 +33.0% 11,880 7,870 +51.0% Group performance by airline Available
Slide 38: Group performance by airline vs 2019
Performance by airline Quarter Year to date Q2 2023 Q2 2019 v2019 H1 2023 H1 2019 v2019 H1 2023 traffic and capacity statistics vs 2019 Passengers carried ('000s) 3,059 3,255 -6.0% 5,054 5,451 -7.3% Revenue passenger km (m) 7,444 6,996 +6.4% 11,880 11,251 +5.6% Group performance by airline Availabl
Slide 39: Alternative Performance Measures (APMs) and Financial terminology definitions
H1 2023 Financial results Alternative Performance Measures (APMs) and Financial terminology definitions Measure IFRS/APM Definition Source of calculation Operating profit (and other Income APM See IAG 2022 ARA (APMs section) and accounting policies H1 2023 Interim Management Report (Reconciliation o
Slide 40: Connecting people, businesses and countries
Connecting people, businesses and countries 2023 Half One results 40
International Consolidated Airlines Group — H1 2023 Earnings Presentation on 6ix