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RNS Number : 8794N International Cons Airlines Group 10 May 2024
IAG Q1 results 2024
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 deposits(1) 8,726 6,837
Borrowings(1) 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 debt(1) 7,438 9,245
Net debt to EBITDA before exceptional items (times)(1) 1.3 1.7
Total liquidity(1, 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 ASKs higher/(lower) v2023 Passenger load factor (%) Passenger Passenger revenue per ASK higher/(lower) v2023(1)
2024 load factor
higher/(lower)
v2023
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 (https://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 accoun
(https://www.iairgroup.com/media/cpth1dmh/iag091-en-ara_2023.pdf) ts
(https://www.iairgroup.com/media/cpth1dmh/iag091-en-ara_2023.pdf) 2023
(https://www.iairgroup.com/media/cpth1dmh/iag091-en-ara_2023.pdf) . These
documents are available on www.iairgroup.com (https://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 Higher/(lower)
load factor 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 2024 2023 Higher/(lower)
€ million 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) 2024 2023 Higher/(lower)
€ million 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) Higher/(lower)
vly (%) 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) Higher/(lower) vly
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) Higher/(lower)
vly (%) 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 2024
Favourable/(adverse)
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 Of which financed in the three months to Aircraft delivered in 2023 and financed in the three months to
three months to 31 March 2024 31 March 2024
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 31 December 2023
2024
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 31 December 2023
2024
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 Exceptional items Before exceptional items Statutory 2023 Exceptional items Before exceptional items
2024 2024 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)
Tax(1) 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 (93) (87)
items
Income statement impact of convertible bonds - -
Adjusted loss (93) (87)
Weighted average number of ordinary shares in issue used for basic earnings 4,917 4,955
per share
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 ccy adjustment(1) Three months to Three months to
31 March 2024 31 March 2024 31 March 2023
Reported ccy
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 31 December 2023
2024
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 Closing at Closing at
31 December
31 March 31 March
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
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