Strong demand for travel has helped
to deliver a very good first quarter and we are well-positioned for
the summer
Summary
• Strong demand across our
airlines has driven higher revenue,
positive unit revenue and, alongside our transformation benefits,
increased operating profit in the first quarter of 2024
• Operating profit before
exceptional items of €68 million (Q1
2023: €9 million),
an increase of €59 million
• We continue to invest in our
core markets, with 7.0% passenger capacity growth
vs Q1 2023
• Non-fuel
unit costs in the quarter were as expected. They reflect planned
investment to deliver customer benefits and operational efficiency,
as well as the annualised impact of 2023 pay deals; no change to
expectations for the full year
• Our balance sheet
continues to strengthen, benefitting from
strong profit and cash performance as well as seasonality:
net debt to EBITDA before exceptional items of 1.3
times (31 December 2023: 1.7 times, 31 March 2023: 2.1
times)
• We are well-positioned for
the summer
•
Luis Gallego, IAG Chief Executive
Officer, said:
"Our transformation initiatives and
increased demand, including over the Easter
holidays, have delivered another very good set of results
with improvements to both revenue and operating
profit.
"Our Group benefits from the
strength of our core markets - North Atlantic, South Atlantic and
intra-Europe - and the performance of our brands. Investment across the Group in transformation is delivering
encouraging improvements in punctuality and customer
experience at our airlines. IAG Loyalty continues to perform
very well.
"We are well-positioned for the summer. The high demand for
travel is a continuing trend."
Financial summary:
|
Three
months to 31
March
|
Reported results (€
million)
|
2024
|
2023
|
Total revenue
|
6,429
|
5,889
|
Operating profit
|
68
|
9
|
Loss after tax
|
(4)
|
(87)
|
Basic loss per share
(€ cents)
|
(0.1)
|
(1.8)
|
Cash, cash equivalents and
interest-bearing deposits1
|
8,726
|
6,837
|
Borrowings1
|
16,164
|
16,082
|
|
|
|
Alternative performance measures (€
million)
|
2024
|
2023
|
Total revenue before exceptional
items
|
6,429
|
5,889
|
Operating profit before exceptional items
|
68
|
9
|
Operating margin before exceptional
items
|
1.1%
|
0.2%
|
Loss after tax before exceptional items
|
(93)
|
(87)
|
Adjusted loss per share
(€ cents)
|
(1.9)
|
(1.8)
|
Net debt1
|
7,438
|
9,245
|
Net debt to EBITDA before
exceptional items (times)1
|
1.3
|
1.7
|
Total
liquidity1, 2
|
13,330
|
11,624
|
For definitions of Alternative
performance measures, refer to IAG Annual report and accounts
2023.
1 The prior
period comparative is 31 December 2023.
2 Total liquidity includes
Cash, cash equivalents and interest-bearing deposits, plus
committed and undrawn general and aircraft-specific financing
facilities.
2
Financial highlights for the first
quarter of 2024
• Passenger
revenue per available seat kilometre ('ASK') for the first quarter
was 4.4% higher than in the first quarter of 2023, through the
benefit of the timing of Easter and a continued strong leisure
traffic recovery, with business traffic recovering more
slowly
• Non-fuel unit costs
increased by 3.7% versus quarter one 2023, driven by investments in
the business and the impact of wage settlements agreed during the
course of 2023
• Fuel unit cost was down 4.9%
versus the first quarter of 2023, linked to lower effective average
fuel prices net of hedging and the benefits of IAG's more efficient
aircraft deliveries
• Operating margin before
exceptional items for the first quarter was 1.1%
• Loss after tax for the first
quarter of €4 million (Q1 2023: loss after tax of €87
million)
• Net debt has reduced in the
quarter to €7.4 billion (31 December 2023: €9.2 billion, 31 March
2023: €8.4 billion)
•
Strategic highlights
Trading and network
Three months to 31 March 2024
|
Proportion
of total ASKs
2024
|
ASKs
higher/(lower) v2023
|
Passenger
load factor (%)
|
Passenger
load
factor
higher/(lower)
v2023
|
Passenger
revenue per ASK higher/(lower) v20231
|
North Atlantic
|
28.7 %
|
0.6
%
|
77.8
|
3.0pts
|
6.5
%
|
Latin America and
Caribbean
|
21.6 %
|
14.4 %
|
86.8
|
(0.1)pts
|
(1.4) %
|
Europe
|
23.6 %
|
9.0
%
|
84.3
|
1.7pts
|
5.7
%
|
Domestic (Spain and UK)
|
8.3
%
|
6.5
%
|
87.2
|
2.0pts
|
6.9
%
|
Africa, Middle East and South
Asia
|
14.1 %
|
0.4
%
|
82.8
|
(0.1)pts
|
(3.4) %
|
Asia Pacific
|
3.7
%
|
43.4 %
|
87.3
|
(1.5)pts
|
(12.6)
%
|
Total network
|
100.0
%
|
7.0
%
|
83.1
|
1.6pts
|
4.4
%
|
1 Passenger revenue per ASK
for total network is based on total
passenger revenue divided by ASKs. For the analysis by region,
passenger revenue excludes certain items that are not directly
assigned at a route level, including joint business payments or
receipts, foreign exchange hedging gains or losses and adjustments
to assumptions for unused tickets.
IAG increased capacity for the North
Atlantic region by 0.6% in the first
quarter, with incremental growth at Aer Lingus, British Airways and
Iberia. Unit revenue increased by 6.5% with
good demand in both the business and leisure segments.
The Group has continued to invest in
the strongly growing Latin America and Caribbean region, mainly
through Iberia, but also adding capacity at British Airways and
LEVEL, delivering overall capacity growth of 14.4% in the first quarter. Continuing
strong demand has supported pricing, with only a small unit decline
of 1.4%, on top of the substantial capacity
increase.
Our capacity growth to Europe was
9.0% in the first quarter, with growth in
particular at Aer Lingus, British Airways and
Iberia. The continuing demand for travel between major
European cities across all of our airlines, in particular for
leisure, as well as the benefit from the timing of the Easter
weekend, has delivered unit revenue growth of 5.7%.
Our Domestic region (Spain and UK)
capacity growth was 6.5% in the first
quarter, mostly in Spain through Iberia and Vueling. As in the
remainder of Europe, robust demand for travel and the Easter
weekend has supported a unit revenue increase of 6.9%.
The rest of the
world is currently more challenging. Capacity to the Africa,
Middle East and South Asia region increased by 0.4% and unit revenues have declined by 3.4%. In particular the conflict in the Middle East has
impacted flying by most of our airlines to the region. Our capacity
to the Asia Pacific region, only 3.7% of
our Group capacity, increased by 43.4%,
mainly reflecting the annualisation of British
Airways' route restoration in 2023. This large capacity
increase has led to a unit revenue decline
of 12.6% in the quarter.
Other
On 1 April, BA Holidays transferred to IAG Loyalty. This will support
BA Holidays' ambitious growth strategy, add value to IAG
Loyalty and deliver more for our customers
and our airlines within IAG.
We continue to make progress through
the Air Europa acquisition process and have
presented a package of remedies to the European Commission. Our
expectation remains for the process to complete later this
year.
Outlook
• We expect positive
long-term, sustainable demand for travel
• We are
well-positioned for the summer
• Our full year capacity plans
remain for around 7% ASK growth, with investment in our core
markets
• We continue to expect
non-fuel unit costs to increase slightly for the year as we
continue to invest in the business
• We continue to expect to
generate significant free cash flow and to maintain a strong
balance sheet
• We are focused on our
strategy to deliver world-class margins and returns
• We are committed to
sustainable shareholder value creation and cash
returns
LEI: 959800TZHQRUSH1ESL13
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 and depend on
circumstances that will occur in the future. Actual results could
differ materially from those expressed or implied by such
forward-looking statements.
Forward-looking statements often use
words such as "expects", "believes", "may", "will", "could",
"should", "continues", "intends", "plans", "targets", "predicts",
"estimates", "envisages" or "anticipates" or other words of similar
meaning or their negatives. They include, without limitation, any
and all projections relating to the results of operations and
financial conditions of International Consolidated Airlines Group,
S.A. and its subsidiary undertakings from time to time (the
'Group'), as well as plans and objectives for future operations,
expected future revenues, financing plans, expected expenditure,
acquisitions and divestments relating to the Group and discussions
of the Group's business plans, and its assumptions, expectations,
objectives and resilience with respect to climate scenarios. All
forward-looking statements in this announcement are based upon
information known to the Group on the date of this announcement and
speak as of the date of this announcement. Other than in accordance
with its legal or regulatory obligations, the Group does not
undertake to update or revise any forward-looking statement to
reflect any changes in events, conditions or circumstances on which
any such statement is based.
Actual results may differ from those
expressed or implied in the forward-looking statements in this
announcement as a result of any number of known and unknown risks,
uncertainties and other factors, including, but not limited to,
economic and geo-political, market, regulatory, climate, supply
chain or other significant external events, many of which are
difficult to predict and are generally beyond the control of the
Group, and it is not reasonably possible to itemise each item.
Accordingly, readers of this announcement are cautioned against
relying on forward-looking statements. Further information on the
primary risks of the business and the Group's risk management
process is set out in the Risk management and principal risk
factors section in the Annual report and accounts 2023; this
document is available on www.iairgroup.com.
All forward-looking statements made on or after the date of this
announcement and attributable to IAG are expressly qualified in
their entirety by the primary risks set out in that
section.
Alternative Performance
Measures:
This announcement contains, in
addition to the financial information prepared in accordance with
International Financial Reporting Standards ('IFRS') and derived
from the Group's financial statements, alternative performance
measures ('APMs') as defined in the Guidelines on alternative
performance measures issued by the European Securities and Markets
Authority (ESMA) on 5 October 2015. The performance of the Group is
assessed using a number of APMs. These measures are not defined
under IFRS, should be considered in addition to IFRS measurements,
may differ to definitions given by regulatory bodies relevant to
the Group and may differ to similarly titled measures presented by
other companies. They are used to measure the outcome of the
Group's strategy based on 'Unrivalled customer proposition', 'Value
accretive and sustainable growth' and 'Efficiency and
innovation'.
For definitions and explanations of
APMs, refer to the APMs section in the most recent published
financial report and in the IAG
Annual report and accounts
2023.
These documents are available on
www.iairgroup.com.
IAG Investor Relations
Waterside (HAA2),
PO Box 365,
Harmondsworth,
Middlesex,
UB7 0GB
Investor.relations@iairgroup.com
CONSOLIDATED INCOME
STATEMENT
|
Three
months to 31
March
|
€ million
|
2024
|
2023
|
Higher/(lower)
|
|
|
|
|
Passenger revenue
|
5,632
|
5,041
|
11.7 %
|
Cargo revenue
|
283
|
323
|
(12.4)
%
|
Other revenue
|
514
|
525
|
(2.1) %
|
Total revenue
|
6,429
|
5,889
|
9.2
%
|
|
|
|
|
Employee costs
|
1,437
|
1,257
|
14.3 %
|
Fuel costs and emissions
charges
|
1,789
|
1,758
|
1.8
%
|
Handling, catering and other
operating costs
|
894
|
776
|
15.2 %
|
Landing fees and en-route
charges
|
525
|
484
|
8.5
%
|
Engineering and other aircraft
costs
|
578
|
587
|
(1.5) %
|
Property, IT and other
costs
|
280
|
249
|
12.4 %
|
Selling costs
|
294
|
280
|
5.0
%
|
Depreciation, amortisation and
impairment
|
559
|
486
|
15.0 %
|
Net loss/(gain) on sale of property,
plant and equipment
|
1
|
(10)
|
nm
|
Currency differences
|
4
|
13
|
(69.2)
%
|
Total expenditure on
operations
|
6,361
|
5,880
|
8.2
%
|
Operating profit
|
68
|
9
|
nm
|
|
|
|
|
Finance costs
|
(228)
|
(274)
|
(16.8)
%
|
Finance income
|
75
|
68
|
10.3 %
|
Net change in fair value of
financial instruments
|
(9)
|
(1)
|
nm
|
Net financing credit relating to
pensions
|
14
|
25
|
(44.0)
%
|
Net currency retranslation
(charges)/credits
|
(44)
|
60
|
nm
|
Other non-operating
credits/(charges)
|
37
|
(8)
|
nm
|
Total net non-operating
costs
|
(155)
|
(130)
|
19.2 %
|
Loss before tax
|
(87)
|
(121)
|
(28.1) %
|
Tax
|
83
|
34
|
nm
|
Loss after tax for the period
|
(4)
|
(87)
|
(95.4)
%
|
ALTERNATIVE PERFORMANCE
MEASURES
All figures in the tables below are
before exceptional items. Refer to Alternative performance measures
section for more detail.
|
Three
months to 31
March
|
|
Before
exceptional items
|
€ million
|
2024
|
2023
|
Higher/(lower)
|
|
|
|
|
Passenger revenue
|
5,632
|
5,041
|
11.7 %
|
Cargo revenue
|
283
|
323
|
(12.4)
%
|
Other revenue
|
514
|
525
|
(2.1) %
|
Total revenue
|
6,429
|
5,889
|
9.2
%
|
|
|
|
|
Employee costs
|
1,437
|
1,257
|
14.3 %
|
Fuel costs and emissions
charges
|
1,789
|
1,758
|
1.8
%
|
Handling, catering and other
operating costs
|
894
|
776
|
15.2 %
|
Landing fees and en-route
charges
|
525
|
484
|
8.5
%
|
Engineering and other aircraft
costs
|
578
|
587
|
(1.5) %
|
Property, IT and other
costs
|
280
|
249
|
12.4 %
|
Selling costs
|
294
|
280
|
5.0
%
|
Depreciation, amortisation and
impairment
|
559
|
486
|
15.0 %
|
Net loss/(gain) on sale of property,
plant and equipment
|
1
|
(10)
|
nm
|
Currency differences
|
4
|
13
|
(69.2)
%
|
Total expenditure on
operations
|
6,361
|
5,880
|
8.2
%
|
Operating profit
|
68
|
9
|
nm
|
|
|
|
|
Finance costs
|
(228)
|
(274)
|
(16.8)
%
|
Finance income
|
75
|
68
|
10.3 %
|
Net change in fair value of
financial instruments
|
(9)
|
(1)
|
nm
|
Net financing credit relating to
pensions
|
14
|
25
|
(44.0)
%
|
Net currency retranslation
(charges)/credits
|
(44)
|
60
|
nm
|
Other non-operating
credits/(charges)
|
37
|
(8)
|
nm
|
Total net non-operating
costs
|
(155)
|
(130)
|
19.2 %
|
Loss before tax
|
(87)
|
(121)
|
(28.1) %
|
Tax
|
(6)
|
34
|
nm
|
Loss after tax for the period
|
(93)
|
(87)
|
6.9
%
|
|
|
|
|
Operating figures
|
2024
|
2023
|
Higher/
(lower)
|
Available seat kilometres (ASK
million)
|
76,684
|
71,663
|
7.0
%
|
Revenue passenger kilometres (RPK
million)
|
63,751
|
58,423
|
9.1
%
|
Passenger load factor (per
cent)
|
83.1
|
81.5
|
1.6pts
|
Passenger numbers
(thousands)
|
26,361
|
24,279
|
8.6
%
|
Cargo tonne kilometres (CTK
million)
|
1,217
|
1,125
|
8.2
%
|
Sold cargo tonnes
(thousands)
|
155
|
151
|
2.6
%
|
Sectors
|
167,285
|
157,500
|
6.2
%
|
Block hours (hours)
|
505,457
|
468,625
|
7.9
%
|
Aircraft in service
|
585
|
561
|
4.3
%
|
Passenger revenue per RPK (€
cents)
|
8.83
|
8.63
|
2.4
%
|
Passenger revenue per ASK (€
cents)
|
7.34
|
7.03
|
4.4
%
|
Cargo revenue per CTK (€
cents)
|
23.25
|
28.71
|
(19.0)
%
|
Fuel cost per ASK (€
cents)
|
2.33
|
2.45
|
(4.9) %
|
Non-fuel costs per ASK (€
cents)
|
5.96
|
5.75
|
3.7
%
|
Total cost per ASK (€
cents)
|
8.30
|
8.21
|
1.1
%
|
FINANCIAL REVIEW for the three months to 31 March 2024
IAG capacity
In the first three months of
2024, passenger capacity operated, measured
in available seat kilometres (ASKs), rose by 7.0% versus the same period in 2023.
Capacity operated by
airline
|
ASKs
higher/(lower) v2023
|
Passenger
load
factor
(%)
|
Higher/(lower)
v2023
|
Aer Lingus
|
4.0
%
|
74.9
|
0.1pts
|
British Airways
|
5.0
%
|
81.1
|
2.3pts
|
Iberia
|
15.4 %
|
85.5
|
0.1pts
|
LEVEL
|
5.2
%
|
94.8
|
3.1pts
|
Vueling
|
2.0
%
|
91.0
|
1.7pts
|
Group
|
7.0
%
|
83.1
|
1.6pts
|
Iberia's growth of 15.4% versus the first quarter of 2023 is principally driven by the increase in the
number of Airbus A350-900 aircraft in
service flying to North and South America, with 22 A350-900 aircraft in service at the end of the first
quarter, compared with 16 at 31 March
2023.
Basis of preparation
In its assessment of going concern
over the period of at least 12 months from the
date of approval of this report (the 'going concern period'), the
Group has considered the impact of a severe but plausible downside
scenario and sensitivities, together with aircraft financing
requirements, and the Directors have a reasonable
expectation that the Group has sufficient liquidity to continue in
operational existence over the going concern period, and hence
continue to adopt the going concern basis.
Unless stated otherwise, all figures
and variances quoted below relate to the first three months of 2024
compared with the first three months of 2023 on a reported basis
(including exceptional
items).
Summary
Reported results
€ million
|
2024
|
2023
|
Higher/(lower)
vly
|
Operating profit
|
68
|
9
|
59
|
Loss before tax
|
(87)
|
(121)
|
34
|
Loss after tax
|
(4)
|
(87)
|
83
|
The Group's operating profit for the
first quarter increased by €59 million
versus the first quarter of 2023, driven by
higher passenger unit revenues and lower effective
fuel prices after hedging, net of the impact of an expected
increase in non-fuel unit costs, as discussed further
below.
Summary of exceptional
items
On 18 January 2024 the Tribunal
Constitucional (Constitutional Court) in Spain ruled
that the Royal Decree-Law 3/2016, introducing a number of
amendments to the corporate income tax law, was unconstitutional.
The amendments were accordingly revoked, leading to the recognition
of an exceptional tax credit of €89 million
relating to the 2023 tax year. See
Alternative performance measures section
for further information.
There were no exceptional items in
the first three months of 2023.
Alternative performance measures
(before exceptional items)
€ million
|
2024
|
2023
|
Higher/(lower)
vly
|
Operating profit
|
68
|
9
|
59
|
Loss before tax
|
(87)
|
(121)
|
34
|
Loss after tax
|
(93)
|
(87)
|
(6)
|
Revenue
€ million
|
2024
|
Higher/(lower) vly (%)
|
Higher/(lower)
vly
|
Passenger revenue
|
5,632
|
11.7 %
|
591
|
Cargo revenue
|
283
|
(12.4)
%
|
(40)
|
Other revenue
|
514
|
(2.1) %
|
(11)
|
Total revenue
|
6,429
|
9.2
%
|
540
|
Total revenue increased
€540 million versus 2023, driven by an increase in passenger traffic and
yields, partially offset by a reduction in Cargo
revenue and a small reduction in Other revenue.
Passenger revenue
The increase in Passenger revenue of €591
million, or 11.7%, was ahead of the
increase in passenger capacity of 7.0%,
driven by higher yields, measured as passenger revenue per revenue
passenger kilometre ('RPK'), up 2.4%,
together with higher passenger load factors, with
the Group passenger load factor 1.6 points higher. These
improvements led to an increase in passenger unit revenue, measured
as passenger revenue per ASK, of 4.4%; at
constant currency, passenger unit revenue increased by 4.0%. The growth in Passenger revenue was linked to the
increase in capacity, strong leisure demand and the earlier timing
of Easter than in the previous year. Leisure travel demand remains
strong and corporate travel continues to
recover.
Cargo revenue
Cargo revenue, at €283 million, was €40 million
lower than in 2023. Cargo volumes, measured
in cargo tonne kilometres (CTKs), were 8.2%
higher than the previous year. Cargo yields, measured as cargo
revenue per cargo tonne kilometre, were 19.0% below those of 2023,
impacted by the increase in global passenger
airline capacity across the industry and elevated prices in
the first three months of 2023. An
increased demand for sea-to-air freight conversion from South Asia
and the Middle East helped to partially offset the decline in
revenue versus the previous year.
Other revenue
Other revenue, at €514 million was
down €11 million versus 2023, mainly due to lower third-party
maintenance revenue within Iberia.
Operating costs
Total operating expenditure rose
from €5,880 million in 2023 to €6,361 million in
2024, an increase of 8.2%, linked to the higher volume of flights, lower
fuel unit costs and an increase in non-fuel
unit costs, which increased by 3.7% versus
the first quarter of 2023. At constant currency and excluding the impact of non-flying
activity, airline non-fuel unit costs rose by 4.6%, in line with investments in the
business, the impact of wage increases during the course of 2023
and supplier cost increases, partially mitigated by the impact of
the Group's transformation initiatives. See Alternative
performance measures for further information.
Employee costs
|
2024
|
Higher/(lower)
vly
(%)
|
Higher/(lower)
vly
|
Employee costs, € million
|
1,437
|
14.3 %
|
180
|
Employee costs per ASK, €
cents
|
1.87
|
6.8
%
|
|
The rise in Employee costs of
€180 million or 14.3% versus 2023 reflected the
timing of wage settlements, with a number of the Group's wage
settlements in 2023 occurring after the
first quarter. Employee numbers also rose as the
airlines increase their flying activity and prepare for increased
flying schedules for the summer period.
Fuel costs and emissions
charges
|
2024
|
Higher/(lower)
vly
(%)
|
Higher/(lower) vly
|
Fuel costs and emissions
charges, € million
|
1,789
|
1.8
%
|
31
|
Fuel costs and emissions charges per
ASK, € cents
|
2.33
|
(4.9) %
|
|
Fuel costs and emissions charges
were up €31 million, or 1.8% versus 2023, reflecting
increased flying volumes, but with lower commodity
fuel prices than in the first three months of 2023, and a neutral position on hedging, versus a small
gain on fuel and related foreign exchange hedging in 2023. Within Fuel costs and emissions charges, the
provision for complying with emissions trading schemes was
€69 million, up from €47
million in 2023.
Supplier costs
€ million
|
2024
|
Higher/(lower) vly (%)
|
Higher/(lower)
vly
|
Handling, catering and other
operating costs
|
894
|
15.2 %
|
118
|
Landing fees and en-route
charges
|
525
|
8.5
%
|
41
|
Engineering and other aircraft
costs
|
578
|
(1.5) %
|
(9)
|
Property, IT and other
costs
|
280
|
12.4 %
|
31
|
Selling costs
|
294
|
5.0
%
|
14
|
Currency differences
|
4
|
(69.2)
%
|
(9)
|
Total Supplier costs
|
2,575
|
7.8
%
|
186
|
Supplier costs per ASK, €
cents
|
3.36
|
0.7
%
|
|
Total Supplier costs rose by €186
million, or 7.8%, to €2,575 million, with the impact of the Group's
cost transformation initiatives partially mitigating the impacts of
inflation and the additional operating cost arising from the
Group's conscious investment in customer experience and IT.
Supplier unit costs were up by 0.7% versus 2023.
Ownership costs
Ownership costs include
Depreciation, amortisation and impairment of tangible and
intangible assets, including right of use assets, and the Net
loss/(gain) on sale of property, plant and
equipment.
|
2024
|
Higher/(lower)
vly
(%)
|
Higher/(lower)
vly
|
Depreciation, amortisation and
impairment
|
559
|
15.0 %
|
73
|
Net loss on
sale of property, plant and equipment
|
1
|
nm
|
11
|
Ownership costs, € million
|
560
|
17.6 %
|
84
|
Ownership costs per ASK, €
cents
|
0.73
|
9.9
%
|
|
The increase in ownership costs
versus 2023 is mainly driven by the
increase in the Group's fleet of aircraft, which is linked to the
airlines' growth in capacity and their
investments in new, more fuel-efficient aircraft, together with
customer-focused investments, such as new and improved seats in
business cabins. The Net loss on sale of property, plant and
equipment was €1 million, reflecting the
disposal of aircraft withdrawn from service and related spare
parts.
Exchange rate impact
Exchange rate impacts are calculated
by retranslating current year results at prior year exchange rates.
The reported revenues and expenditures are impacted by the
translation of currencies other than euro to the Group's reporting
currency of euro, primarily pound sterling related to British
Airways and IAG Loyalty. From a transaction perspective, the
Group's performance is impacted by the fluctuation of exchange
rates, primarily exposure to the pound sterling, euro and US
dollar. The Group typically generates a surplus in most currencies
in which it does business, except the US dollar, for which capital
expenditure, debt repayments and fuel purchases typically create a
deficit which is managed and partially hedged. The Group hedges its
economic exposure from transacting in foreign currencies but does
not hedge the translation impact of reporting in euro.
Overall, in the first three months
of 2024 the Group operating profit before
exceptional items was reduced by €1 million
due to adverse exchange rate impacts.
Exchange rate impact before
exceptional items
€ million
Favourable/(adverse)
|
|
2024
|
|
Translation impact
|
Transaction impact
|
Total
exchange impact
|
Total exchange impact on
revenue
|
99
|
(73)
|
26
|
Total exchange impact on operating
expenditures
|
(94)
|
67
|
(27)
|
Total exchange impact on operating
profit
|
5
|
(6)
|
(1)
|
Operating profit/(loss) before
exceptional items by operating company
|
2024
|
2023
|
Higher/(lower)
|
British Airways (£
million)
|
22
|
14
|
8
|
Aer Lingus (€ million)
|
(82)
|
(81)
|
(1)
|
Iberia (€ million)
|
70
|
66
|
4
|
Vueling (€ million)
|
(25)
|
(64)
|
39
|
IAG Loyalty (£ million)
|
80
|
71
|
9
|
Typically, the first quarter of the
year is the least profitable for the Group's airlines and the
operating losses in Aer Lingus and Vueling reflect the nature of
their businesses, with proportionately more focus on leisure
segments, which are more seasonal.
Total net non-operating
costs
Total net non-operating costs for
the three months were €155 million, versus
€130 million in 2023. Finance costs of €228
million were €46 million lower than in
2023, mainly reflecting the voluntary early
repayment in the second half of 2023 of
debt drawn as a result of the impact of the COVID-19 pandemic in 2020 and 2021. Net currency
retranslation resulted in a charge of €44
million in 2024, principally reflecting US dollar
foreign exchange movements, versus a credit of €60 million in 2023. Other
non-operating credits of €37 million
(2023: charges of €8 million) mainly represent net gains on derivative
contracts for which hedge accounting is not applied.
Tax
The tax credit on the loss for the
three months was €83 million (2023: tax credit of €34 million),
with an effective tax rate of 95.4% (2023: 28.1%). Excluding
the exceptional tax credit outlined above, the tax charge on the
loss for the three months was €6 million.
The substantial majority of the
Group's activities are taxed where the main operations are based:
in Spain, the UK and Ireland, which have statutory corporation tax
rates of 25%, 25% and 12.5% respectively for 2024. The expected
effective tax rate for the Group is determined by applying the
relevant corporation tax rate to the profits or losses of each
jurisdiction. The geographical distribution of profits and losses
in the Group results in the expected tax rate being 11.5% for the
three months to 31 March 2024.
The difference between the actual
effective tax rate of 95.4% and the expected tax rate of 11.5% is
principally due to the Group having recorded an adjustment to
current and deferred tax in respect of prior periods which arose as
a result of the revocation of Royal Decree-Law 3/2016 in Spain. See
Alternative performance measures section for further
information.
Aircraft deliveries and
financing
Number of aircraft
|
Delivered
in the
three
months to
31 March
2024
|
Of which
financed in the three months to
31
March 2024
|
Aircraft
delivered in 2023 and financed in the three
months to
31
March 2024
|
Airbus A321neo (British
Airways)
|
-
|
-
|
1
|
Airbus A350-1000 (British
Airways)
|
1
|
1
|
-
|
Airbus A350-900 (Iberia)
|
1
|
1
|
1
|
Airbus A320ceo (Vueling direct
lease)
|
2
|
2
|
-
|
Total
|
4
|
4
|
2
|
During the three months, the Group
took delivery of four aircraft, all of
which were financed, including two Airbus
A320ceo aircraft for Vueling to provide backfill for additional
aircraft maintenance requirements linked to Pratt and Whitney 'GTF'
engines. The Group also financed two
aircraft delivered in 2023.
Net debt and leverage
€ million
|
31
March
2024
|
31
December 2023
|
Total borrowings
|
16,164
|
16,082
|
Cash, cash equivalents and current
interest-bearing deposits
|
8,726
|
6,837
|
Net debt
|
7,438
|
9,245
|
Rolling four quarters EBITDA before
exceptional items
|
5,702
|
5,570
|
Net debt to EBITDA before
exceptional items
|
1.3
|
1.7
|
The main driver of the reduction in
leverage versus 31 December 2023 was the
increase in cash during the quarter, which
increased mainly due to the normal seasonal inflow of bookings for
future travel periods during the first quarter of the
year.
Liquidity
€ million
|
31
March
2024
|
31
December 2023
|
Cash, cash equivalents and current
interest-bearing deposits
|
8,726
|
6,837
|
Committed and undrawn general and
overdraft facilities
|
4,443
|
4,412
|
Committed and undrawn aircraft
facilities
|
161
|
375
|
Total
|
13,330
|
11,624
|
The reduction in committed and
undrawn aircraft facilities was due to the financing of two
aircraft for British Airways, for which the financing was agreed
and committed during 2023.
PRINCIPAL RISKS AND
UNCERTAINTIES
The Group has continued to maintain
its framework and processes to identify, assess, and manage risks.
The principal risks and uncertainties affecting the Group are
detailed in the Risk management and principal risk
factors section of the 2023 Annual report and accounts and
these remain relevant. The Board has continued to monitor and
assess risks in the light of changes that influence the Group and
the aviation industry and continues to closely review how risks
combine to create increased threats. In assessing its principal
risks, the Group has considered its risk
environment including: (i) geopolitical tensions and conflicts and
their impact on financial markets, fuel price, operations and
customer sentiment towards travel, particularly business travel;
(ii) operational resilience, including the impacts of the continued
delays in the supply chain, especially engines and component
availability and reliability; (iii) how the Group's airlines
respond to disruption from geopolitical and other operational
events to manage disrupted customers; (iv) regulator or government
reviews into capacity at airports or pricing, particularly
ancillaries, which could disrupt airlines' revenue models; (v) the
Group's industrial relations landscape and the risk of breakdown in
industrial negotiations; and (vi) people engagement, including the
culture, talent and skillsets needed to accelerate the change
agenda and maximise the opportunities offered by Artificial
Intelligence (AI) adoption. Where further action has been required,
the Board has considered potential mitigations, and, where
appropriate or feasible, the Group has implemented or confirmed
plans that would address those risks or retain them within the
Board's determined Group risk appetite.
Traffic and capacity statistics -
Group
Three months to 31 March
|
2024
|
2023
|
Higher/(lower)
vly
|
|
|
|
|
Passengers carried
('000s)
|
26,361
|
24,279
|
8.6
%
|
North Atlantic
|
2,569
|
2,456
|
4.6
%
|
Latin America and
Caribbean
|
1,785
|
1,569
|
13.8 %
|
Europe
|
13,436
|
12,092
|
11.1 %
|
Domestic (Spain and UK)
|
6,684
|
6,345
|
5.3
%
|
Africa, Middle East and South
Asia
|
1,619
|
1,628
|
(0.6) %
|
Asia Pacific
|
268
|
189
|
41.8 %
|
|
|
|
|
Revenue passenger kilometres
(million)
|
63,751
|
58,423
|
9.1
%
|
North Atlantic
|
17,081
|
16,326
|
4.6
%
|
Latin America and
Caribbean
|
14,416
|
12,605
|
14.4 %
|
Europe
|
15,257
|
13,715
|
11.2 %
|
Domestic (Spain and UK)
|
5,543
|
5,084
|
9.0
%
|
Africa, Middle East and South
Asia
|
8,944
|
8,914
|
0.3
%
|
Asia Pacific
|
2,510
|
1,779
|
41.1 %
|
|
|
|
|
Available seat kilometres
(million)
|
76,684
|
71,663
|
7.0
%
|
North Atlantic
|
21,961
|
21,835
|
0.6
%
|
Latin America and
Caribbean
|
16,600
|
14,507
|
14.4 %
|
Europe
|
18,096
|
16,598
|
9.0
%
|
Domestic (Spain and UK)
|
6,354
|
5,968
|
6.5
%
|
Africa, Middle East and South
Asia
|
10,799
|
10,751
|
0.4
%
|
Asia Pacific
|
2,874
|
2,004
|
43.4 %
|
|
|
|
|
|
|
|
Pts
Var
|
Passenger load factor (%)
|
83.1
|
81.5
|
1.6
|
North Atlantic
|
77.8
|
74.8
|
3.0
|
Latin America and
Caribbean
|
86.8
|
86.9
|
(0.1)
|
Europe
|
84.3
|
82.6
|
1.7
|
Domestic (Spain and UK)
|
87.2
|
85.2
|
2.0
|
Africa, Middle East and South
Asia
|
82.8
|
82.9
|
(0.1)
|
Asia Pacific
|
87.3
|
88.8
|
(1.5)
|
|
|
|
|
Cargo tonne kilometres
(million)
|
1,217
|
1,125
|
8.2
%
|
Traffic and capacity statistics - by
airline
|
|
|
|
Three months to 31 March
|
2024
|
2023
|
Higher/(lower)
vly
|
Aer Lingus
|
|
|
|
Passengers carried
('000s)
|
2,104
|
1,995
|
5.5
%
|
Revenue passenger kilometres
(million)
|
4,614
|
4,436
|
4.0
%
|
Available seat kilometres
(million)
|
6,163
|
5,927
|
4.0
%
|
Passenger load factor (%)/Pts
variance
|
74.9
|
74.8
|
0.1pts
|
Cargo tonne kilometres
(million)
|
40
|
32
|
25.0 %
|
|
|
|
|
British Airways
|
|
|
|
Passengers carried
('000s)
|
10,340
|
9,434
|
9.6
%
|
Revenue passenger kilometres
(million)
|
32,984
|
30,517
|
8.1
%
|
Available seat kilometres
(million)
|
40,659
|
38,738
|
5.0
%
|
Passenger load factor (%)/Pts
variance
|
81.1
|
78.8
|
2.3pts
|
Cargo tonne kilometres
(million)
|
894
|
841
|
6.3
%
|
|
|
|
|
Iberia
|
|
|
|
Passengers carried
('000s)
|
6,001
|
5,481
|
9.5
%
|
Revenue passenger kilometres
(million)
|
16,845
|
14,577
|
15.6 %
|
Available seat kilometres
(million)
|
19,693
|
17,071
|
15.4 %
|
Passenger load factor (%)/Pts
variance
|
85.5
|
85.4
|
0.1pts
|
Cargo tonne kilometres
(million)
|
275
|
242
|
13.6 %
|
|
|
|
|
LEVEL
|
|
|
|
Passengers carried
('000s)
|
140
|
129
|
8.5
%
|
Revenue passenger kilometres
(million)
|
1,256
|
1,156
|
8.7
%
|
Available seat kilometres
(million)
|
1,325
|
1,260
|
5.2
%
|
Passenger load factor (%)/Pts
variance
|
94.8
|
91.7
|
3.1pts
|
Cargo tonne kilometres
(million)
|
8
|
10
|
(20.0)
%
|
|
|
|
|
Vueling
|
|
|
|
Passengers carried
('000s)
|
7,776
|
7,240
|
7.4
%
|
Revenue passenger kilometres
(million)
|
8,052
|
7,737
|
4.1
%
|
Available seat kilometres
(million)
|
8,844
|
8,667
|
2.0
%
|
Passenger load factor (%)/Pts
variance
|
91.0
|
89.3
|
1.7pts
|
Cargo tonne kilometres
(million)
|
n/a
|
n/a
|
n/a
|
ALTERNATIVE PERFORMANCE
MEASURES
The performance of the Group is
assessed using a number of alternative performance measures (APMs),
some of which have been identified as key performance indicators of
the Group. These measures are not defined under International
Financial Reporting Standards (IFRS), should be considered in
addition to IFRS measurements, may differ to definitions given by
regulatory bodies applicable to the Group and may differ to
similarly titled measures presented by other companies. They are
used to measure the outcome of the Group's strategy based on the
Group's strategic imperatives of: strengthening our core; driving
earnings growth through asset-light businesses; and operating under
a strengthened financial and sustainability framework.
During the three months to 31 March
2024, the Group has made no changes to its pre-existing disclosures
and treatments of APMs compared to those disclosed in the Annual
report and accounts for the year to 31 December 2023.
The definition of each APM, together
with a reconciliation to the nearest measure prepared in accordance
with IFRS is presented below.
a Loss after tax before exceptional
items
Exceptional items are those that in
the Board's and management's view need to be separately disclosed
by virtue of their size or incidence to supplement the
understanding of the entity's financial performance. The Management
Committee of the Group uses financial performance on a
pre-exceptional basis to evaluate operating performance and to make
strategic, financial and operational decisions, and externally
because it is widely used by security analysts and investors in
evaluating the performance of the Group between reporting periods
and against other companies.
While there has been one exceptional
item recorded in the three months to 31
March 2024, no exceptional items
were recorded in the three months to 31
March 2023.
The table below reconciles the
statutory Income statement to the Income statement before
exceptional items of the Group:
|
Three
months to 31
March
|
€ million
|
Statutory
2024
|
Exceptional items
|
Before
exceptional items
2024
|
Statutory
2023
|
Exceptional items
|
Before
exceptional items
2023
|
|
|
|
|
|
|
|
Passenger revenue
|
5,632
|
-
|
5,632
|
5,041
|
-
|
5,041
|
Cargo revenue
|
283
|
-
|
283
|
323
|
-
|
323
|
Other revenue
|
514
|
-
|
514
|
525
|
-
|
525
|
Total revenue
|
6,429
|
-
|
6,429
|
5,889
|
-
|
5,889
|
|
|
|
|
|
|
|
Total expenditure on
operations
|
6,361
|
-
|
6,361
|
5,880
|
-
|
5,880
|
Operating profit
|
68
|
-
|
68
|
9
|
-
|
9
|
|
|
|
|
|
|
|
Total net non-operating
costs
|
(155)
|
-
|
(155)
|
(130)
|
-
|
(130)
|
Loss before tax
|
(87)
|
-
|
(87)
|
(121)
|
-
|
(121)
|
Tax1
|
83
|
89
|
(6)
|
34
|
-
|
34
|
Loss after tax for the
period
|
(4)
|
89
|
(93)
|
(87)
|
-
|
(87)
|
1 Revocation of Royal
Decree-Law 3/2016 in Spain
On 18 January 2024 the
Tribunal Constitucional (Constitutional Court) in Spain ruled that the Royal
Decree-Law 3/2016, introducing a number of amendments to the
corporate income tax law, was unconstitutional. The amendments were
accordingly revoked, leading to the recognition of an exceptional
tax credit of €89 million in the three months to 31 March
2024.
Prior to the introduction of RDL
3/2016, the Spanish companies of the Group were permitted to offset
up to 70% of their taxable profits with historical accumulated tax
losses (to the extent there were sufficient tax losses to do so).
With the introduction of the RDL 3/2016, this limitation of tax
losses applied to taxable profits was reduced to 25%. The ruling by
the Tribunal
Constitucional principally means that the loss limitation
reverts to 70%, with the associated current tax for fiscal year
2023 updated accordingly. With the change to the loss limitation,
the Group expects to be able to utilise more of its historical tax
losses, which in turn has led to the Group's Spanish companies
recognising deferred tax assets in relation to tax losses that were
previously unrecognised.
The combination of both of the
current tax and the deferred tax has given rise to the
aforementioned exceptional tax credit. There was no cash flow
impact in the three months to 31 March 2024, as the refund will be
received subsequent to the final 2023 tax return submissions for
the Group's Spanish companies, at the earliest in late
2024.
In addition to fiscal year 2023, the
Tribunal
Constitucional revocation also
applied to fiscal years 2016 to 2022. However, there remains
significant uncertainty as to timing and amounts, if any, to be
recovered. Accordingly, no income tax credit in the Income
statement nor the associated income tax receivable in the Balance
sheet have been recorded.
b Adjusted loss per share
(KPI)
Adjusted loss is based on results before exceptional items after
tax and adjusted for loss attributable to
equity holders and interest on convertible bonds, divided by the
weighted average number of ordinary shares, adjusted for the dilutive impact, when applicable, of
the assumed conversion of the bonds and employee share schemes
outstanding.
|
Three
months to 31
March
|
€ million
|
2024
|
2023
|
Loss after
tax attributable to equity holders of the parent
|
(4)
|
(87)
|
Exceptional items
|
89
|
-
|
Loss after
tax attributable to equity holders of the parent before exceptional
items
|
(93)
|
(87)
|
Income statement impact of
convertible bonds
|
-
|
-
|
Adjusted loss
|
(93)
|
(87)
|
|
|
|
Weighted average number of ordinary
shares in issue used for basic earnings per share
|
4,917
|
4,955
|
Weighted average number of ordinary
shares used for diluted earnings per share
|
4,917
|
4,955
|
|
|
|
Basic loss per share
(€ cents)
|
(0.1)
|
(1.8)
|
Basic loss
per share before exceptional items (€ cents)
|
(1.9)
|
(1.8)
|
Adjusted loss per share before exceptional items (€
cents)
|
(1.9)
|
(1.8)
|
c Airline non-fuel costs per
ASK
The Group monitors airline unit
costs (per available seat kilometre (ASK), a standard airline
measure of capacity) as a means of tracking operating efficiency of
the core airline business. As fuel costs can vary with commodity
prices, the Group monitors fuel and non-fuel costs individually.
Within non-fuel costs are the costs associated with generating
Other revenue, which typically do not represent the costs of
transporting passengers or cargo and instead represent the costs of
handling and maintenance for other airlines, non-flight products in
BA Holidays and costs associated with other miscellaneous
non-flight revenue streams. Airline non-fuel costs per ASK is
defined as total operating expenditure before exceptional items,
less fuel costs and emission charges and
less non-flight specific costs divided by total available seat
kilometres (ASKs), and is shown on a constant currency basis
(abbreviated to 'ccy').
€ million
|
Three
months to
31
March 2024
Reported
|
ccy
adjustment1
|
Three
months to
31
March 2024
ccy
|
Three
months to
31
March 2023
|
Total expenditure on
operations
|
6,361
|
(27)
|
6,334
|
5,880
|
Less: exceptional items in operating
expenditure
|
-
|
-
|
-
|
-
|
Less: fuel costs and emission
charges
|
1,789
|
-
|
1,789
|
1,758
|
Non-fuel costs
|
4,572
|
(27)
|
4,545
|
4,122
|
Less: Non-flight specific
costs
|
443
|
(4)
|
439
|
452
|
Airline non-fuel costs
|
4,129
|
(23)
|
4,106
|
3,670
|
|
|
|
|
|
ASKs (millions)
|
76,684
|
|
76,684
|
71,663
|
|
|
|
|
|
Airline non-fuel unit costs per ASK
(€ cents)
|
5.39
|
|
5.36
|
5.12
|
1 Refer to note e for the
definition of the ccy adjustment.
1
d Net debt to EBITDA before
exceptional items (KPI)
To supplement total borrowings as
presented in accordance with IFRS, the Group reviews net debt to
EBITDA before exceptional items to assess its level of net debt in
comparison to the underlying earnings generated by the Group in
order to evaluate the underlying business performance of the Group.
This measure is used to monitor the Group's leverage and to assess
financial headroom against internal and external security analyst
and investor benchmarks.
Net debt is defined as long-term
borrowings (both current and non-current), less cash, cash
equivalents and current interest-bearing deposits. Net debt
excludes supply chain financing arrangements which are classified
within trade payables.
EBITDA before
exceptional items is defined as the rolling four quarters operating
result before exceptional items, interest, taxation, depreciation,
amortisation and impairment
The Group believes that this
additional measure, which is used internally to assess the Group's
financial capacity, is useful to the users of the financial
statements in helping them to see how the Group's financial
capacity has changed over the year. It is a measure of the
profitability of the Group and of the core operating cash flows
generated by the business model.
€ million
|
31
March
2024
|
31 December 2023
|
Interest-bearing long-term
borrowings
|
16,164
|
16,082
|
Less: Cash and cash
equivalents
|
6,874
|
5,441
|
Less: Other current interest-bearing
deposits
|
1,852
|
1,396
|
Net debt
|
7,438
|
9,245
|
|
|
|
Operating profit
|
3,566
|
3,507
|
Add: Depreciation, amortisation and
impairment
|
2,136
|
2,063
|
EBITDA
|
5,702
|
5,570
|
Add: Exceptional items
|
-
|
-
|
EBITDA before exceptional
items
|
5,702
|
5,570
|
|
|
|
Net debt to EBITDA before
exceptional items (times)
|
1.3
|
1.7
|
e Results on a constant currency
basis
Movements in foreign exchange rates
impact the Group's financial results. The IAG Board and Management
Committee review the results, including revenue and operating costs
at constant rates of exchange. These financial measures are
calculated at constant rates of exchange based on a retranslation,
at prior year exchange rates, of the current year's results of the
Group. Although the Board and Management Committee do not believe
that these measures are a substitute for IFRS measures, the Board
and Management Committee do believe that such results excluding the
impact of currency fluctuations year-on-year provide additional
useful information to investors regarding the Group's operating
performance on a constant currency basis. Accordingly, the
financial measures at constant currency within the discussion of
the Group Financial review should be read in conjunction with the
information provided in the Group financial statements.
The following table represents the
main average and closing exchange rates for the reporting periods.
Where 2024 figures are stated at a constant currency basis, they
have applied the 2023 rates stated below:
Foreign exchange rates
|
Average
three months to
31
March
|
Closing
at
31
March
|
Closing
at
31 December
|
|
2024
|
2023
|
2024
|
2023
|
Pound sterling to euro
|
1.16
|
1.14
|
1.17
|
1.16
|
Euro to US dollar
|
1.09
|
1.07
|
1.09
|
1.09
|
Pound sterling to US
dollar
|
1.27
|
1.22
|
1.27
|
1.27
|
f Liquidity
The Board and the Management
Committee monitor liquidity in order to assess the resilience of
the Group to adverse events and uncertainty and develop funding
initiatives to maintain this resilience.
Liquidity is used by analysts,
investors and other users of the financial statements as a measure
to the financial health and resilience of the Group.
Liquidity is defined as Cash and
cash equivalents plus Current interest-bearing deposits, plus
Committed and undrawn general and aircraft
financing facilities.
€ million
|
31
March 2024
|
31
December 2023
|
Cash and cash equivalents
|
6,874
|
5,441
|
Current interest-bearing
deposits
|
1,852
|
1,396
|
Committed and undrawn general and
overdraft facilities
|
4,390
|
4,359
|
Committed and undrawn aircraft
facilities
|
161
|
375
|
Overdrafts and other
facilities
|
53
|
53
|
Total liquidity
|
13,330
|
11,624
|
http://www.rns-pdf.londonstockexchange.com/rns/8794N_1-2024-5-9.pdf