Source: IAG

SIX MONTHS RESULTS ANNOUNCEMENT

International Consolidated Airlines Group (IAG) today (July 30, 2021) presents Group consolidated results for the six months to June 30, 2021.

COVID-19 situation and management actions:

  • Passenger capacity in quarter 2 was 21.9 per cent of 2019 and continues to be adversely affected by the COVID-19 pandemic together with government restrictions and quarantine requirements
  • Current passenger capacity plans for quarter 3 are for around 45 per cent of 2019 capacity, but remain uncertain and subject to ongoing review
  • 1,371 cargo-only flights operated in quarter 2, up from 1,306 in quarter 1
  • Strong liquidity of €10.2 billion at the end of quarter 2, driven by successful conclusion of financing initiatives since the

    start of the year, together with cost actions and UK pension contribution deferral. These initiatives included:

    • Drawdown of previously committed borrowing for British Airways (£2.0 billion UK Export Finance) and Aer

      Lingus (remaining €75 million drawn against Ireland Strategic Investment Fund facility)

    • €1.2 billion of IAG Senior Unsecured Bonds issued, with issue oversubscribed
    • €825 million of IAG Convertible Bonds issued, also oversubscribed
    • New 3-year $1.755 billion committed, secured revolving credit facility concluded for Aer Lingus, British Airways

      and Iberia and which remains undrawn; simultaneous cancellation of British Airways’ previous revolving credit

      facility scheduled to mature in June 2021 (value at December 31, 2020: $0.8 billion undrawn)

    • Agreement for British Airways to defer monthly pension deficit contributions totalling £450 million between

      October 2020 and September 2021

    • Cash operating costs for quarter 2 of €190 million per week
  • Sustainability-linked EETC financing executed in July for British Airways’ remaining fleet deliveries for 2021, with total financing to be drawn of $785 million

    IAG period highlights on results:

  • Reported operating loss for the second quarter €967 million (2020 restated: operating loss €2,182 million) and operating loss before exceptional items €1,045 million (2020 restated: operating loss before exceptional items €1,370 million)
  • Reported operating loss for the half year €2,035 million (2020 restated: operating loss €4,052 million), and operating loss before exceptional items €2,180 million (2020 restated: operating loss before exceptional items €1,915 million)
  • Exceptional credit before tax in the half year of €145 million on discontinuance of fuel and foreign exchange hedge accounting (2020: exceptional charge before tax of €2,137 million on discontinuance of fuel and foreign exchange hedge accounting and impairment of fleet)
  • Loss after tax and exceptional items for the half year €2,048 million (2020 restated: loss €3,813 million) and loss after tax before exceptional items: €2,169 million (2020 restated: loss €1,972 million)
  • Cash of €7.7 billion at June 30, 2021 up €1.7 billion on December 31, 2020. Committed and undrawn general and aircraft facilities of €2.5 billion, bringing total liquidity to €10.2 billion, with pro forma liquidity including the British Airways sustainability-linked EETC financing executed in July at €10.8 billion

Luis Gallego, IAG Chief Executive Officer, said:

“In the short term, our focus is on ensuring our operational readiness, so we have the flexibility to capitalise on an environment where there’s evidence of widespread pent-up demand when travel restrictions are lifted.

“This is reflected in Iberia’s and Vueling’s results. They were the best performers within the group in the second quarter reflecting stronger Latin American and Spanish domestic markets driven by fewer travel restrictions. We know that recovery will be uneven, but we’re ready to take advantage of a surge in air travel demand in line with increasing vaccination rates.

“We welcome the recent announcement that fully vaccinated travellers from amber countries in the EU and the US will no longer have to quarantine upon arrival in the UK. We see this as an important first step in fully re-opening the transatlantic travel corridor.

“All our airlines continue to take significant actions to preserve their strength through the current pandemic and to position them for recovery. We continue to build resilience by preserving cash, boosting liquidity and reducing our cost base. At 30 June, the Group’s liquidity was €10.2 billion with a significant improvement in operating cash flow compared to previous quarters.

“Longer term we’re preparing our business so that we can emerge stronger and more competitive in a structurally changed industry. For example, we’re accelerating the digitalisation of our business and our agreements with unions are enabling us to improve productivity and reduce our cost base while increasing the proportion of variable costs.

“We remain resolute in our climate commitments. Recently, British Airways successfully raised $785 million through an EETC financing linked to the airline’s sustainability targets. We have also been upgraded by the CDP (Carbon Disclosure Project) to A- in recognition of our comprehensive carbon management strategy. IAG is the only European airline group that has been awarded this high grade.”

Trading outlook

Given the uncertainty over the timing of the lifting of government travel restrictions and the continued impact and duration of COVID-19, IAG is not providing profit guidance for 2021.