International Consolidated Airlines Group SA · LSE:IAG
International Consolidated Airlines Group SA — Q3 2021 Earnings Presentation
32 slides from International Consolidated Airlines Group SA's earnings presentation, Nov 5, 2021
Slide 1: IAG Results Quarter Three 2021
INTERNAL USE ONLY IAG RESULTS QUARTER THREE 2021 5 November 2021
Slide 2: Highlights
INTERNAL USE ONLY HIGHLIGHTS LUIS GALLEGO, CHIEF EXECUTIVE OFFICER
Slide 3: 3Q 2021 Financial Highlights and Outlook
3Q 2021 FINANCIAL HIGHLIGHTS AND OUTLOOK Significant recovery underway 3Q 2021 HIGHLIGHTS OUTLOOK Pre exceptional operating loss more than We expect a pre exceptional operating loss for halved to €0.5bn compared to previous FY 2021 of approximately €3.0bn quarters Positive quarterly operating cash f
Slide 4: Operating companies making financial progress and focused on restoring networks
3 Q 2 0 2 1 S T R AT E G I C H I G H L I G H T S Operating companies making financial progress and focused on restoring networks Lower but significant loss Significantly reduced Positive operating result in 3Q Operating break-even in 3Q Best quarter since 2019 – due to travel restrictions operating
Slide 5: IAG continues to lead global aviation towards net zero
S U S TA I N A B I L I T Y U P D AT E IAG continues to lead global aviation towards net zero Driving/supporting net zero plans 10% SAF commitment by 2030 Also ramping up OpCo action Committed 10 Oct 2019 Committed 22 Apr 2021 Hangar51 pitch day with Roadmap 8 Nov 2019 first European airline 12 susta
Slide 6: Financial Results
INTERNAL USE ONLY FINANCIAL RESULTS STEVE GUNNING, CHIEF FINANCIAL OFFICER
Slide 7: Best financial performance since COVID started
3Q 2021 FINANCIAL HIGHLIGHTS Best financial performance since COVID started 1Q 2021 2Q 2021 3Q 2021 1Q 20 1Q 21 2Q 20 2Q 21 3Q 20 3Q 21 69.1% 45.8% 51.8% -18.6pts -0.5 -0.5 RPK, ASK -34.9pts -33.2pts Pre exceptional Load Factor operating result -1.1 -1.0 -1.4 -1.3 (vs 2019) -56.6% (€bn) -65.8% -80.4
Slide 8: More than halved operating loss on capacity increase compared to previous quarters
3 Q 2 0 2 1 P R E - E X C E P T I O N A L O P E R AT I N G R E S U LT More than halved operating loss on capacity increase compared to previous quarters 3Q 2021 3Q 2020 vly 3Q 2019 v2y Passenger revenue 1,999 737 nm 6,492 -69.2% Cargo revenue 405 302 34.1 % 269 50.6% Other revenue 305 200 52.5% 505
Slide 9: Iberia profitable, Vueling break-even, improved Aer Lingus and BA performance
3 Q 2 0 2 1 F I N A N C I A L P E R F O R M A N C E AT A I R L I N E L E V E L Iberia profitable, Vueling break-even, improved Aer Lingus and BA performance 3Q 2021 (€m) v2y 3Q 2021 (£m) v2y 3Q 2021 (€m) v2y 3Q 2021 (€m) v2y Passenger revenue 115 -82.8% 721 -77.8% 563 -53.3% 461 -47.7% Cargo revenue
Slide 10: Liquidity even higher due to positive operating cash flow and further debt raising
LIQUIDITY Liquidity even higher due to positive operating cash flow and further debt raising Liquidity position Liquidity actions Cash + Facilities (% of 2019 revenue)* 1Q 2021 • £2.0bn UKEF guaranteed 5-year loan facility drawdown 36% 37% 32% 26% 32% 41% 40% 42% 47% by British Airways • €75m ISIF f
Slide 11: Net debt broadly unchanged in 3Q excluding FX
DEBT POSITION Net debt broadly unchanged in 3Q excluding FX €m 30 Sep 2021 30 Jun 2021 31 Mar 2021 31 Dec 2020 31 Dec 2019 Gross debt 19,975 19,771 19,539 15,679 14,254 Bank and other loans 7,475 7,440 6,948 3,369 1,954 Asset finance and lease liabilities 12,500 12,331 12,591 12,310 12,300 Cash, cas
Slide 12: Fuel hedging - 70% in 4Q 2021 and c.40% in FY 2022
FUEL HEDGING Fuel hedging - 70% in 4Q 2021 and c.40% in FY 2022 Fuel hedging 4Q 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 Jet Fuel price scenario $700/mt $700/mt $700/mt $700/mt $700/mt $/€ scenario 1.17 1.17 1.17 1.17 1.17 Hedge ratio 70% 54% 38% 31% 24% Effective blended price post fuel and FX hedging*
Slide 13: CEO Update & Outlook
INTERNAL USE ONLY CEO UPDATE & OUTLOOK LUIS GALLEGO, CHIEF EXECUTIVE OFFICER
Slide 14: Aer Lingus focused on restoring network, launching Manchester base
A E R L I N G U S U P D AT E Aer Lingus focused on restoring network, launching Manchester base and negotiating employee agreements • Planning major restoration of Ireland North Atlantic network from November 2021 (90% of 2019 capacity by summer 2022) • Launched Manchester base 20 October 2021 (Barb
Slide 15: British Airways focused on restoring c.90% of operations by 3Q 2022
B R I T I S H A I R W AY S U P D AT E British Airways focused on restoring c.90% of operations by 3Q 2022 and negotiating to develop a competitive platform for Gatwick shorthaul for the Group • Planning major restoration of North Atlantic network from November 2021 and full restoration by 3Q 2022 •
Slide 16: Iberia leveraging the Madrid hub to boost connectivity
I B E R I A U P D AT E Iberia leveraging the Madrid hub to boost connectivity and restoring the North and Latin American networks • Leveraging the Madrid hub to boost connectivity • Planning full restoration on North America routes by 2Q 2022 • Planning restoration of 85% of Latin America capacity b
Slide 17: Vueling consolidating domestic leadership whilst exploiting opportunities across Europe
V U E L I N G U P D AT E Vueling consolidating domestic leadership whilst exploiting opportunities across Europe Paris Orly route network Current routes New routes • Capitalising on the strength of the Spanish domestic market • Expanding Paris Orly base by 32 new destinations in addition to 22 curre
Slide 18: IAG Loyalty helping to drive booking momentum and cash generation
I A G L O YA LT Y U P D AT E IAG Loyalty helping to drive booking momentum and cash generation • IAG Loyalty continues to be profitable and cash generative, with 3Q delivering highest quarterly profit since 2019 • September a record month for customers collecting Avios through non-airline partners •
Slide 19: Strong recovery in longhaul bookings following UK/US announcements
W E E K LY N E W PA S S E N G E R B O O K I N G I N TA K E S Strong recovery in longhaul bookings following UK/US announcements and continued domestic strength Longhaul International shorthaul Spain domestic vs. 2019 (5 Jan 20 – 17 Oct 21) vs. 2019 (5 Jan 20 – 17 Oct 21) vs. 2019 (5 Jan 20 – 17 Oct
Slide 20: Regional passenger revenue contribution
R E G I O N A L PA S S E N G E R R E V E N U E C O N T R I B U T I O N ( % ) Despite restrictions in place, longhaul continues to be a significant driver of revenue 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% Sep-20 Oct-20 Jan-21 Feb-21 Mar-21 May-21 Sep-2
Slide 21: Premium revenue performance
PREMIUM REVENUE PERFORMANCE Strong premium leisure performance and early signs of recovery in business traffic % of 2019 % of 2019 Premium leisure and business revenue vs 2019 Premium leisure and business revenue vs 2019 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% May-20 May-21 Sep-21 Sep-20 Oct
Slide 22: Full restoration of North Atlantic capacity to 2019 levels by Summer 2022
N O R T H AT L A N T I C R E - O P E N I N G Full restoration of North Atlantic capacity to 2019 levels by Summer 2022 Breadth Depth (routes*) (ASKs as % of 2019) Winter Summer Winter Summer 19 21 19 22 2021 2022 36 30 36 34 67% 96% 16 14 16 15 50% 104% 6 5 6 8 77% 105% 3 1 3 4 9% 312% 60 49 60 60 6
Slide 23: 4Q 2021 planned capacity of c.60% of 2019 levels
2 0 2 1 C A PA C I T Y B Y M O N T H 4Q 2021 planned capacity of c.60% of 2019 levels Absolute 2021 and % proportion of 2019 ASKs 20,000 68% 18,000 16,000 52% 58% 50% 43% 14,000 37% 12,000 10,000 27% 8,000 23% 21% 6,000 18% 18% 18% 4,000 2,000 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1Q 202
Slide 24: Demand recovery is clearly underway
OUTLOOK Demand recovery is clearly underway Most travel restrictions are being removed, releasing pent-up demand • UK traffic light simplification, elimination of ‘red’ countries requiring quarantine and reduction in testing requirements for fully vaccinated travellers • US open to EU, UK and other
Slide 25: Preparing to emerge stronger from COVID-19
CONCLUSIONS Preparing to emerge stronger from COVID-19 • We continue to lead the industry’s efforts to make flying sustainable • Positive quarterly operating cash flow in 3Q for the first time since the beginning of the pandemic • Liquidity is even stronger than at end June and has continued to rise
Slide 26: Appendices
INTERNAL USE ONLY APPENDICES
Slide 27: Weekly cash operating cost evolution
W E E K LY C A S H O P E R AT I N G C O S T E V O L U T I O N Weekly cash operating cost lower than expected in 2Q €260m 13 €205m €205m €215m €190m 12 7 18 €175m Cargo-driven 15 flight costs 16 247 193 198 197 159 175 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 Excl cargo Cargo Capacity (ASKs) 4
Slide 28: Loss after tax of €0.6bn in 3Q
R E C O N C I L I AT I O N B E T W E E N P R E E X C E P T I O N A L O P E R AT I N G R E S U L T A N D P O S T E X C E P T I O N A L R E S U L T A F T E R TA X Loss after tax of €0.6bn in 3Q €m 3Q 2021 3Q 2020 Operating result (pre exceptional) -485 -1,305 Exceptional items 33 -618 Operating result
Slide 29: Government actions required
GOVERNMENT ACTIONS REQUIRED Following good progress on removal of restrictions a multilateral approach is required to complete return to normal • Move to traveller-centred risk based approach not country of origin Key Principles • Fully vaccinated people travel without restriction for full recovery
Slide 30: 3Q 2021 traffic and capacity statistics - Group performance
Quarter Group performance 3Q 2021 3Q 2020 vLY 3Q 2019 v19 Passengers carried ('000s) 15,475 6,592 +134.8% 34,562 -55.2% Domestic (UK & Spain) 6,524 3,344 +95.1% 8,067 -19.1% Europe 7,053 2,810 +151.0% 18,997 -62.9% GROUP PERFORMANCE North America 644 159 +305.0% 3,567 -81.9% Latin America & Caribbea
Slide 31: 3Q 2021 traffic and capacity statistics - Airline performance
Quarter Performance by airline 3Q 2021 3Q 2020 vLY 3Q 2019 v19 Passengers carried ('000s) 786 238 +230.3% 3,590 -78.1% Revenue passenger km (m) 1,354 412 +228.6% 7,782 -82.6% AIRLINE PERFORMANCE Available seat km (m) 2,416 1,531 +57.8% 8,925 -72.9% Passenger load factor (%) 56.0 26.9 +29.1 pts 87.2
Slide 32: Disclaimer
INTERNAL USE ONLY DI S CL A IMER 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
International Consolidated Airlines Group (IAG) — Q3 2021 Earnings Presentation on 6ix