International Consolidated Airlines Group SA · LSE:IAG
International Consolidated Airlines Group SA — FY2022 Earnings Presentation
39 slides from International Consolidated Airlines Group SA's earnings presentation, Feb 24, 2023
Slide 1: 2022 Full Year Results
CONNECTING PEOPLE, BUSINESSES AND COUNTRIES 2022 FULL YEAR RESULTS 24 February 2023
Slide 2: Highlights
HIGHLIGHTS LUIS GALLEGO, CHIEF EXECUTIVE OFFICER
Slide 3: Strong recovery in demand and good progress against strategic objectives in 2022
F Y 2 0 2 2 S T R AT E G I C H I G H L I G H T S Strong recovery in demand and good progress against strategic objectives in 2022 • Strong recovery in demand post Omicron following the removal of travel restrictions • Restored 87% of 2019 capacity by 4Q 2022 • Focus on strengthening our hubs: • Quic
Slide 4: Positive start to 2023 after strong financial recovery in 2022
FY 2022 FINANCIAL PERFORMA NC E AND FY 2023 OUTLOOK Positive start to 2023 after strong financial recovery in 2022 • Strong demand, especially for leisure, has driven a rapid recovery in financial performance • Pre-exceptional operating profit of €1.2 billion for FY 2022 • Strong cash generation res
Slide 5: Committed to generating long-term shareholder value by returning to pre-COVID-19 operating profit
IAG INVESTM EN T CASE Committed to generating long-term shareholder value by returning to pre-COVID-19 levels of operating profit We have a clear ambition to deliver… …which will enable us to serve our 4 key stakeholders • Strong long-term shareholder value INVESTORS (SHAREHOLDERS, LENDERS) • Return
Slide 6: Confident in generating long-term shareholder value based on IAG's investment case
IAG INVESTM EN T CASE Confident in generating long-term shareholder value based on IAG´s compelling investment case Actions • Disciplined capital allocation • Recovering profitability in all Unique airlines • Active portfolio management approach structure • Ordered 109 new generation • Flexibility a
Slide 7: Financial Results
FINANCIAL RESULTS NICHOLAS CADBURY, CHIEF FINANCIAL OFFICER
Slide 8: Strong financial recovery in 2022
FY 2022 FINANCIAL HIGHLIGHTS Strong financial recovery in 2022 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 1Q 22 2Q 22 3Q 22 4Q 22 FY 22 1.21 1.23 -13.4% -18.9% -14.5% 0.49 RPK, ASK -22.0% -19.6% -22.0% Pre-exceptional 0.29 -34.9% -25.0% -24.5% Load Factor -41.8% operating result (vs 2019) (€bn) 72.2% 8
Slide 9: Significantly profitable fourth quarter
4 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 Significantly profitable fourth quarter • Operating result €486m including FX impact of -€6m • Total revenue 3% higher than 4Q-19 (€m) 4Q 2022 4Q 2021 4Q 2019 v19 • Passenger revenue fully recovered (+1% vs 4Q-19) (99% recove
Slide 10: Profitable fourth quarter driven by British Airways and Iberia
4 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 Profitable fourth quarter driven by British Airways and Iberia, with Iberia better than 2019 4Q 2022 (€m) v19 4Q 2022 (£m) v19 4Q 2022 (€m) v19 4Q 2022 (€m) v19 Total revenue 442 -6% 3,230 0% 1,579 +11% 600 +18% Passenger
Slide 11: Strong cash position driven by positive EBITDA and working capital
FY 2022 CASH BRIDGE Strong cash position driven by positive EBITDA and working capital €m €1,656m 1,442 (86) (916) (3,875) 1,092 3,303 1,436 (2,505) 837 1,036 (100) (8) 9,599 7,943 Cash balance EBITDA* Deferred Other WC & Restructuring Net interest Gross capex Proceeds Proceeds from Repayment of Und
Slide 12: Liquidity continues to strengthen with financing in place for all 2022 deliveries
LIQUIDITY Liquidity continues to strengthen with financing in place for all 2022 deliveries Liquidity position Liquidity and financing actions Cash + Facilities (€bn) (% of 2019 revenue) Aircraft financing 36% 32% 47% 49% 53% 53% 55% • All 2022 aircraft deliveries (27) financed • Financing received
Slide 13: Net debt reduced by c.€700m vs September 2022
DEBT POSITION Net debt reduced by c.€700m vs September 2022 Net debt €m 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Mar 2022 30 Jun 2022 30 Sep 2022 31 Dec 2022 Gross debt 14,254 15,679 19,610 19,777 20,169 20,318 19,984 Bank and other loans 1,954 3,369 7,485 7,425 7,160 6,940 6,546 Asset finance and lea
Slide 14: Investment in 2023 driving customer, cost efficiency and sustainability benefits
F Y 2 0 2 2 / 2 3 C A P I TA L E X P E N D I T U R E Investment in 2023 driving customer, cost efficiency and sustainability benefits Capex Deliveries €3.9bn c.€4bn 19% 29 21% 27 10 15 81% 79% 19 12 2022 2023 2022 2023 Fleet Non-fleet Narrowbody Widebody Fleet includes fleet related payments, produc
Slide 15: Manageable debt repayment schedule
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 3 – F Y 2 0 2 9 INTERNAL USE ONLY Manageable debt repayment schedule €2,738m €875m €825m €715m €700m €571m €287m 2023 2024 2025 2026 2027 2028 2029 UKEF loan Other secured loans Other unsecured bonds and loans Bonds issued by IAG • Flo
Slide 16: Fuel hedging - c.56% for FY 2023
FUEL HEDGING Fuel hedging - c.56% for FY 2023 Fuel hedging 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 2Q 2024 Jet fuel price scenario $1,000/mt $950/mt $910/mt $910/mt $850/mt $850/mt $800/mt $840/mt 1.0608 $/€ scenario $825/mt $820/mt 1.0608 $820/mt 1.0608$785/mt1.0608 1.0608 1.0608 Hedge ratio 69% 60
Slide 17: Business Update and Outlook
BUSINESS UPDATE AND OUTLOOK LUIS GALLEGO, CHIEF EXECUTIVE OFFICER
Slide 18: Agreement signed with Globalia to acquire remaining 80% of Air Europa
A I R E U R O PA P R O P O S E D A C Q U I S I T I O N Agreement signed with Globalia to acquire remaining 80% of Air Europa Transaction overview Air Europa presence in The Americas • 20% stake acquired in August 2022 by exercising option on €100m convertible loan • Purchase price of €400m for the r
Slide 19: Industry recovery supporting strong revenue environment
INDUSTRY RECOVE RY Industry recovery supporting strong revenue environment Europe Global capacity AMESA 80% 80% ASK (tr) 60% 60% (% of 2019) 40% 40% 20% 10.5 20% 0% 8.0 0% -20% 5.7 (76%) -20% 5.0 -40% (54%) -40% -60% ASK var '19 (48%) -60% ASK var '19 -80% RASK var '19 -80% RASK var '19 -100% -100%
Slide 20: Restoring our networks to pre-pandemic levels and launching new destinations
T R A N SFO R M I N G O U R B U SI N ES S – SERV I N G O U R C U STO M ER S Restoring our networks to pre-pandemic levels and launching new destinations • 2022: • 2022: 14 reopened routes, including 6 in • Restarted services to Singapore, Sydney, Tokyo and North America (Los Angeles, Miami, Hong Kon
Slide 21: Investing for our customers
T R A N SFO R M I N G O U R B U SI N ES S – SERV I N G O U R C U STO M ER S Investing for our customers • Aer Lingus improved seat product on A320neo aircraft • Longhaul business class food refresh launched • Improve our digital self service options across website and AerClub, including launch of Wh
Slide 22: Investment in customer engagement driving loyalty
T R A N SFO R M I N G O U R B U SI N ES S – SERV I N G O U R C U STO M ER S Investment in customer engagement driving loyalty Record profit contribution to the Group (+33% vs pre-COVID levels) Delivering strong results • FY 2022 Operating profit £240m, 28% operating margin • More than 25% new Launch
Slide 23: Best in class punctuality at Iberia and British Airways focused on improvement
O P E R AT I O N A L P E R F O R M A N C E – S E R V I N G O U R C U S T O M E R S Best in class punctuality at Iberia and British Airways focused on improvement OTP (D´15) 88.2% 81.6% 65.4% 68.8% 54.3% OTP (D´15) 66.5% 63.8% 54.8% 49.6% 53.5% 1Q 22 2Q 22 3Q 22 4Q 22 YTD 23 1Q 22 2Q 22 3Q 22 4Q 22 Y
Slide 24: Our people are central in our business and key for delivering to our customers
TRANSFORMI N G OUR BUSINES S – SERVING OUR PEOPLE Our people are central in our business and key for delivering to our customers • Recruitment: 7,400 new colleagues at BA in 2022 and on track to recruit 4,100 more in 2023, while EI recruited 980 new people in 2022 • Collective Bargaining Agreements
Slide 25: Delivering against every pillar of our climate strategy
TRANSFORMI N G OUR BUSINES S – SERVING SOCIETY Delivering against every pillar of our climate strategy Clear and ambitious targets • On track to deliver our 2025 and 2030 climate targets and net zero emissions for all Scope 1, 2 and 3 emissions by 2050 • Annual publishing of our emissions trajectory
Slide 26: Strong bookings so far in 2023, particularly leisure
W E E K LY N E W PA S S E N G E R B O O K I N G V O L U M E – B Y H A U L Strong bookings so far in 2023, particularly leisure while business bookings remain stable Spain domestic International shorthaul Longhaul vs. 2019 (3 Jan 2021 – 12 Feb 2023) vs. 2019 (3 Jan 2021 – 12 Feb 2023) vs. 2019 (3 Jan
Slide 27: FY 2023 capacity planned to be at c.98% of 2019
F Y 2 0 2 3 C A PA C I T Y G R O W T H FY 2023 capacity planned to be at c.98% of 2019 and 1Q 2023 broadly unchanged at c.96% Absolute ASKs (million) in 2023 and % proportion of 2019 ASKs ASKs 1Q 2023 FY 2023 100,000 % of 2019 c.96% c.96% c.97% c.102% 90,000 103% 105% 80,000 70,000 89% 93% 60,000 50
Slide 28: Conclusions
CONCLUSION S Positive start to 2023 after strong financial recovery in 2022 • Strong recovery in demand and good progress towards strategic objectives in 2022 • Focused on continuing to restore route networks and operations in 2023 with continued investment in customer, cost efficiency and sustainab
Slide 29: Appendices
APPENDICES
Slide 30: Aer Lingus profitable in 4Q
4 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 profitable in 4Q • Passenger revenue* 99% recovered vs 4Q-19 (103% in 3Q, 83% in 2Q, 53% in 1Q): (€m) 4Q 2022 4Q 2021 4Q 2019 v19 • Total capacity at 98% of 2019 levels with North Atlantic at 105% Passenger rev
Slide 31: British Airways c.8% operating profit margin in 4Q
4 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 c.8% operating profit margin in 4Q (£m) 4Q 2022 4Q 2021 4Q 2019 v19 Passenger revenue 2,775 1,219 2,890 -4% Cargo revenue 263 324 180 +46% Other revenue 192 133 172 +11% • Passenger revenue 86% recovered v
Slide 32: Iberia operating profit higher than 4Q 2019
4 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 operating profit higher than 4Q 2019 • Operating margin of 8.4%, higher than in 4Q-19 • Operating profit higher than 4Q-19 result. Positive operating profit across all business areas (Airline, (€m) 4Q 2022 4Q 2021
Slide 33: Vueling small loss
4 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 small loss (€m) 4Q 2022 4Q 2021 4Q 2019 v19 Passenger revenue 595 358 503 +18% Cargo revenue - - - - Other revenue 5 -3 4 +20% Total revenue 600 355 507 +18% Employee costs 101 76 79 +29% Fuel, oil costs and emiss
Slide 34: Profit after tax and exceptional items of €232m in 4Q 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 Profit after tax and exceptional items of €232m in 4Q 2022 €m 4Q 2022 4Q 2021* Operating result (pre exceptional) 486 -305 Exceptional it
Slide 35: 4Q and FY 2022 traffic and capacity statistics vs 2019
Quarter Year to date Group performance 4Q 2022 4Q 2019 v3y FY 2022 FY 2019 v3y Passengers carried ('000s) 25,222 27,805 -9.3% 94,726 118,253 -19.9% Domestic (UK & Spain) 6,652 6,836 -2.7% 25,649 28,278 -9.3% GROUP PERFORMANCE Europe 12,723 14,035 -9.3% 48,754 62,344 -21.8% North America 2,809 3,126
Slide 36: 4Q and FY 2022 traffic and capacity statistics vs 2021
Quarter Year to date Group performance 4Q 2022 4Q 2021 vLY FY 2022 FY 2021 vLY Passengers carried ('000s) 25,222 15,309 +64.8% 94,726 38,864 +143.7% Domestic (UK & Spain) 6,652 5,347 +24.4% 25,649 16,061 +59.7% GROUP PERFORMANCE Europe 12,723 6,842 +86.0% 48,754 16,341 +198.4% North America 2,809 1,
Slide 37: 4Q and FY 2022 traffic and capacity statistics by airline vs 2019
Quarter Year to date Performance by airline 4Q 2022 4Q 2019 v3y FY 2022 FY 2019 v3y Passengers carried ('000s) 2,278 2,608 -12.7% 8,950 11,649 -23.2% Revenue passenger km (m) 5,340 5,720 -6.6% 20,190 24,753 -18.4% AIRLINE PERFORMANCE Available seat km (m) 7,028 7,132 -1.5% 26,249 30,255 -13.2% Passe
Slide 38: 4Q and FY 2022 traffic and capacity statistics by airline vs 2021
Quarter Year to date Performance by airline 4Q 2022 4Q 2021 vLY FY 2022 FY 2021 vLY Passengers carried ('000s) 2,278 1,014 +124.7% 8,950 2,025 +342.0% Revenue passenger km (m) 5,340 1,877 +184.5% 20,190 3,545 +469.5% AIRLINE PERFORMANCE Available seat km (m) 7,028 3,162 +122.3% 26,249 7,380 +255.7%
Slide 39: 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 — FY2022 Earnings Presentation on 6ix