International Consolidated Airlines Group SA · LSE:IAG
International Consolidated Airlines Group SA — Q2 2022 Earnings Presentation
35 slides from International Consolidated Airlines Group SA's earnings presentation, Jul 29, 2022
Slide 1: Connecting People, Businesses and Countries – Quarter Two 2022 Results
INTERNAL USE ONLY CONNECTING PEOPLE, BUSINESSES AND COUNTRIES QUARTER TWO 2022 RESULTS 29 July 2022
Slide 2: Highlights
INTERNAL USE ONLY HIGHLIGHTS LUIS GALLEGO, CHIEF EXECUTIVE OFFICER
Slide 3: 2Q 2022 Financial Highlights
2Q 2022 FINANCIAL HIGHLIGHTS Strong recovery of underlying profitability and cash generation • First quarter of profitability since the start of the pandemic • Continued recovery in capacity (78% of 2019 levels in 2Q 2022 vs 65% in 1Q 2022), broadly in line with guidance • 2Q 2022 operating profit p
Slide 4: Outlook FY 2022
OUTLOOK FY 2022 Positive outlook for the rest of the year • Forward bookings have recovered to a rate of c.90% of 2019 levels by volume and c.95% by revenue • Demand is strongest on the key domestic, European, North Atlantic and South American / Caribbean routes • Premium leisure revenue continues t
Slide 5: Financial Results
INTERNAL USE ONLY FINANCIAL RESULTS NICHOLAS CADBURY, CHIEF FINANCIAL OFFICER
Slide 6: First positive operating result since 2019
2 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 First positive operating result since 2019 • First quarter of positive passenger unit revenue vs 2019. Improving trend across 2Q (€m) 2Q 2022 2Q 2021 2Q 2019 v19 • Operating result adversely impacted by FX impact of -€106m Pa
Slide 7: Aer Lingus turnaround of operating result
2 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 turnaround of operating result • Passenger revenue 77% recovered vs 2Q-19; (1Q-22 48% recovered vs 1Q-19): • Traffic 80% / capacity 86% recovered vs 2Q-19; load factor 78%, -5pts vs 2Q-19 (€m) 2Q 2022 2Q 2021 2
Slide 8: British Airways first operating profit since 2019
2 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 first operating profit since 2019 (£m) 2Q 2022 2Q 2021 2Q 2019 v19 Passenger revenue 2,277 203 3,112 -27% Cargo revenue 266 279 180 +48% Other revenue 194 24 171 +14% Total revenue 2,737 506 3,463 -21% Emp
Slide 9: Iberia continues to report the best performance in the Group
2 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 continues to report the best performance in the Group • Operating profit positive across all business areas (Airline, 3rd party MRO and Handling) in 2Q-22 • Passenger revenue 96% recovered vs 2Q-19 (1Q-22 77% recov
Slide 10: Vueling full capacity recovery in 2Q
2 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 Vueling full capacity recovery in 2Q (€m) 2Q 2022 2Q 2021 2Q 2019 v19 Passenger revenue 714 146 681 +5% Cargo revenue - - - - Other revenue 3 3 4 -25% Total revenue 717 149 685 +5% Employee costs 87 38 76 +15% Fuel, oil c
Slide 11: 1H 2022 Cash Bridge
1H 2022 CASH BRIDGE Strong cash position driven by working capital and positive EBITDA €m €1,247m 776 (50) (402) (2,100) 2,334 641 (187) (814) 193 302 9,190 554 7,943 Cash balance EBITDA Deferred Other WC & Restructuring Net interest Gross capex Proceeds Proceeds from Repayment of Repayment Forex &
Slide 12: Liquidity
LIQUIDITY Highest liquidity since the start of the pandemic Liquidity position Liquidity and financing actions Cash + Facilities* (% of 2019 revenue) 1Q 2022 • €200m ISIF facility agreed by Aer Lingus 36% 32% 47% 49% 53% • 1 A350 sale and lease back for Iberia €13.5bn €12.4bn • 1 A350 EETC for Briti
Slide 13: Debt Position
DEBT POSITION Net debt reduced despite €910m adverse non-cash movement in 1H Net debt €m 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Mar 2022 31 Jun 2022 Gross debt 14,254 15,679 19,610 19,777 20,169 Bank and other loans 1,954 3,369 7,485 7,425 7,160 Asset finance and lease liabilities 12,300 12,310 12,1
Slide 14: Financial Debt Maturity Profile FY2022–FY2029
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 F Y 2 0 2 2 – F Y 2 0 2 9 INTERNAL USE ONLY Manageable debt repayment schedule €2,778m €975m €825m €716m €700m €567m €571m €284m 2022 2023 2024 2025 2026 2027 2028 2029 UKEF loan ISIF loan Other secured loans Other unsecured bonds and loans Bond
Slide 15: Fuel Hedging
FUEL HEDGING Fuel hedging - currently 81% in 3Q 2022, c.73% for 2H 2022 and c.34% for FY 2023 Fuel hedging 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 Jet fuel price scenario $1,230/mt $1,110/mt $1,055/mt $1,000/mt $970/mt $950/mt $/€ scenario 1.02 1.02 1.02 1.02 1.02 1.02 Hedge ratio 81% 65% 48
Slide 16: Business Update and Outlook
INTERNAL USE ONLY BUSINESS UPDATE AND OUTLOOK LUIS GALLEGO, CHIEF EXECUTIVE OFFICER
Slide 17: Investing in our customers
TRANSFORMING OUR BUSINESS – PRODUCT / CUSTOMER Investing in our customers Cabin Terminal Customer service Digital • British Airways’ Club Suite • British Airways and Iberia to • British Airways catering • Iberia and Trip.com continues to be rolled out co-locate all flights at New refresh of Club Eur
Slide 18: IAG Loyalty - increased relevance and contribution
TRANSFORMING OUR BUSINESS – PRODUCT / CUSTOMER IAG Loyalty - increased relevance and contribution • Avios collected by customers outside of flying in 2Q-22 now +22% higher than 2Q-19, compared to flat in 1Q-22 • Continued strong contribution from American Express partnership: • 2Q-22 performance dri
Slide 19: Progress in restoring operational resilience at Heathrow
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 Progress in restoring operational resilience at Heathrow • Overall referencing processing time is still more than • 2Q absence rate of 6% vs 7% in 1Q (vs normal 4-5%) 100 days on average People Resourcing • New hires increased from
Slide 20: Proactive schedule management to protect the majority of flights and customers
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 Proactive schedule management to protect the majority of flights and customers Schedule changes Total impact on planned flights and capacity Initiative Details May-October 1. Pre-emptive reduction – Cancellation from schedule of pl
Slide 21: Cancellations across the industry
C O M P E T I T O R S O P E R AT I O N A L P E R F O R M A N C E I N 2 Q 2 0 2 2 Cancellations across the industry 4.9% 4.7% 4.3% 4.2% 3.0% 2.9% 2.6% 2.5% 2.4% 2.4% Sample average 1.8% 1.7% 2.2% 1.2% 1.2% 1.0% 1.0% 0.8% 0.3% 0.0% 0.0% North America major carrier North America major carrier North Ame
Slide 22: Focusing on our people
TRANSFORMING OUR BUSINESS – OUR PEOPLE Focusing on our people • Labour discussions • Ongoing collective bargaining negotiations with most work groups at each OpCo • Managing senior talent at Group level - Investing in building the bench-strength and diversity of talent pipelines: • Succession planni
Slide 23: Leading global aviation 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 Leading global aviation towards net zero emissions Recognition Action Region Airline 2021 2020 2019 2018 2017 SAF committed offtakes and investments increased to $865m IAG A- A- B B A Ryanair B B- F F F 25% of 2030 SAF needs
Slide 24: Recent fleet replacement orders important step 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 / C O S T E F F I C I E N C Y Recent fleet replacement orders important step towards net zero emissions Orders Committed (as of 30 June) Subject to Shareholder approval** Aircraft type Future Delivery Future Delivery Options
Slide 25: 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 Absolute ASKs (million) in 2022 and % proportion of 2019 ASKs ASKs c.80% 3Q 2022 FY 2022 80,000 c.85% 100% % of 2019 78% 90% 70,000 93% 88% 80% 60,000 65% 70% 50,000 74% 70% 60% 40,000 50% 84% 87
Slide 26: Strong forward bookings at c.85% in volume and c.95% 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 I N TA K E S Strong forward bookings at c.85% in volume and c.95% in revenue of 2019 levels Spain domestic International shorthaul Longhaul vs. 2019 (3 Jan 2021 – 24 July 2022) 1 May vs. 2019 (3 Jan 2021 – 24 July 2022) vs. 2019 (3 Jan 2021 – 24 July 2
Slide 27: Premium Revenue Performance
PREMIUM REVENUE PERFORMANCE Premium leisure revenue almost fully recovered while business travel makes steady progress • BA’s premium leisure revenue recovered to c.85% of 2019 % of 2019 Premium leisure and business revenue vs 2019 levels by June 120% 100% 80% • Premium leisure routes to Caribbean,
Slide 28: Conclusions: Positive outlook for the rest of the year
CONCLUSIONS Positive outlook for the rest of the year • Strong recovery of underlying profitability and cash generation in the second quarter • All businesses profitable at the operating level • Liquidity strength continues and net debt slightly reduced but will increase in the second half of 2022 •
Slide 29: Appendices
INTERNAL USE ONLY APPENDICES
Slide 30: Loss after tax and exceptional items of c.€0.8bn in 2Q 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 Loss after tax and exceptional items of c.€0.8bn in 2Q 2022 €m 2Q 2022 2Q 2021* Operating result (pre exceptional) 287 -1,045 Exceptional
Slide 31: 2Q and 1H 2022 traffic and capacity statistics vs 2019
Quarter First half year Group performance 2Q 2022 2Q 2019 v3y 1H 2022 1H 2019 v3y Passengers carried ('000s) 25,592 31,504 -18.8% 39,969 55,886 -28.5% Domestic (UK & Spain) 6,838 7,454 -8.3% 11,283 13,375 -15.6% GROUP PERFORMANCE Europe 13,640 16,906 -19.3% 20,062 29,312 -31.6% North America 2,703 3
Slide 32: 2Q and 1H 2022 traffic and capacity statistics vs 2021
Quarter First half year Group performance 2Q 2022 2Q 2021 vLY 1H 2022 1H 2021 vLY Passengers carried ('000s) 25,592 5,468 +368.0% 39,969 8,080 +394.7% Domestic (UK & Spain) 6,838 2,934 +133.1% 11,283 4,190 +169.3% GROUP PERFORMANCE Europe 13,640 1,779 +666.7% 20,062 2,446 +720.2% North America 2,703
Slide 33: 2Q and 1H 2022 traffic and capacity statistics vs 2019 by airline
Performance by airline Quarter 2Q 2022 2Q 2019 v3y 1H 2022 1H 2019 v3y Passengers carried ('000s) 2,541 3,255 -21.9% 3,690 5,451 -32.3% Revenue passenger km (m) 5,595 6,996 -20.0% 7,870 11,251 -30.1% AIRLINE PERFORMANCE Available seat km (m) 7,189 8,394 -14.4% 11,195 14,198 -21.2% Passenger load fac
Slide 34: 2Q and 1H 2022 traffic and capacity statistics vs 2021 by airline
Performance by airline Quarter 2Q 2022 2Q 2021 vLY 1H 2022 1H 2021 vLY Passengers carried ('000s) 2,541 143 +1676.9% 3,690 225 +1540.0% Revenue passenger km (m) 5,595 190 +2844.7% 7,870 314 +2406.4% AIRLINE PERFORMANCE Available seat km (m) 7,189 919 +682.3% 11,195 1,802 +521.3% Passenger load facto
Slide 35: 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
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