International Airlines Group is one of the world's largest airline groups, with a fleet of 573 aircraft, operating 256 destinations and carried around 95 million passengers in 2022. The following airline brands are part of IAG: Aer Lingus; British Airways; Iberia; Level and Vueling. It is a Spanish registered company with shares traded on the London and Madrid Stock Exchanges and is part of the FTSE 100 Index.
We were delighted to welcome Stuart Morgan, Head of Investor Relations, to the latest Yellowstone Advisory webinar to provide an introduction to the company and update on performance and prospects following the recent Capital Markets Day. A recording of the webinar is available here.
As a reminder, International Airlines Group is a market leading commercial aviation group with strong brands, leading margins and returns and a track record of creating sustainable shareholder returns prior to the disruptions of the Covid period.
The strategy is to strengthen the core business, drive earnings growth through investment in asset light businesses and to have a strong financial model. This is to be achieved through growing their business in core markets, investing in BA to improve the customer experience, leveraging the Spanish transformation and continuing to pursue consolidation opportunities. The loyalty programme is the wrapper that connects all parts of the business and contributes strongly to profits and cash flow. Executed well, this should lead to best in class margins and returns, a strong balance sheet to provide financial flexibility, the ability to pay sustainable dividends to shareholders and return excess capital to shareholders.
The last 12 months have shown this to be a very resilient business with margins and ROIC now above pre-covid levels at 13.5% and 15.3% respectively. Balance sheet leverage has fallen to 1.4x, the same level as it was at the end of 2019. This year has witnessed strong customer demand, a market with constrained supply, unit costs have reduced and strong cash generation has resulted in a reduction in gross and net debt.
The four near term strategic priorities over the next 3-4 years are; transformation: looking to make improvements across all businesses so they can reach their long term potential; Leveraging: the good position of the Spanish operations after improvements in the last 10 years to generate over €1.5bn of operating profit; Investing: investment in British Airways which has been slightly left behind…
