REG - Intl Con Airline Grp - 1st Quarter Results

International Consolidated Airlines SAAnnouncement

06/05/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220506:nRSF5858Ka&default-theme=true

RNS Number : 5858K  International Cons Airlines Group  06 May 2022

THREE MONTHS RESULTS ANNOUNCEMENT

 

International Consolidated Airlines Group (IAG) today (May 6, 2022) presented
Group consolidated results for the three months to March 31, 2022.

 

Strong customer demand is expected to drive profitability from quarter 2
onwards

 

·      Passenger capacity in quarter 1 was 65% of 2019 capacity, up from
58% in quarter 4, 2021, as the Group's airlines continued to restore capacity
in advance of the Summer flying programme

·      The continued easing of government-imposed travel restrictions,
particularly in the UK, resulted in improved travel demand, with no noticeable
impact from the war in Ukraine

·      Quarter 1 saw strong business travel recovery, with premium
leisure remaining strong

·      The impact of Omicron had a negative short-term impact in January
and February on the operating result, passenger bookings and cancellations

·      Following the recent lifting of travel restrictions and the steep
ramp up in capacity, British Airways is focusing on improving operations and
customer experience, including moderating planned capacity at Heathrow

·      Current passenger capacity plans for remainder of 2022 are for
around 80% of 2019 capacity in quarter 2, 85% in quarter 3 and 90% in quarter
4, resulting in full-year capacity of around 80% of 2019, with North Atlantic
close to full capacity by quarter 3

 

IAG results for the period:

 

·      Operating loss for the first quarter €731 million (2021
restated(1): operating loss €1,077 million), and operating loss before
exceptional items €754 million (2021 restated(1): operating loss before
exceptional items €1,144 million)

·      Loss after tax and exceptional items for the first quarter €787
million (2021 restated(1): loss €1,074 million) and loss after tax before
exceptional items €810 million (2021 restated(1): loss €1,131 million)

·      Cash was €8,184 million at March 31, 2022, up €241 million on
December 31, 2021, with significantly positive working capital, driven by
bookings for the remainder of the year

·      Cash was impacted by the timing of aircraft financing versus
deliveries, with financing for five Iberia aircraft that were delivered and
paid for in quarter 1 to be drawn down in quarter 2

·      Committed and undrawn general and aircraft financing facilities
increased to €4,176 million (December 31, 2021: €4,043 million), including
an additional €200 million loan facility for Aer Lingus from the Ireland
Strategic Investment Fund (ISIF), bringing total liquidity to €12,360
million (December 31, 2021: €11,986 million)

 

Performance summary:

 ( )                                             Three months to March 31
 Reported results (€ million)                    2022              2021(1)  Higher /

                                                                            (lower)
 Passenger revenue                               2,655             459      nm
 Total revenue                                   3,435             968      nm
 Operating loss                                  (731)             (1,077)  (32.1)%
 Loss after tax                                  (787)             (1,074)  (26.7)%
 Basic loss per share (€ cents)                  (15.9)            (21.6)   (26.4)%
 Cash and interest-bearing deposits(2)           8,184             7,943    3.0 %
 Interest-bearing borrowings(2)                  19,777            19,610   0.9 %
 ( )
 Alternative performance measures (€ million)    2022              2021(1)  Higher /

                                                                            (lower)
 Passenger revenue before exceptional items      2,655             454      nm
 Total revenue before exceptional items          3,435             963      nm
 Operating loss before exceptional items         (754)             (1,144)  (34.1)%
 Loss after tax before exceptional items         (810)             (1,131)  (28.4)%
 Adjusted loss per share (€ cents)               (16.3)            (22.8)   (28.5)%
 Net debt(2)                                     11,593            11,667   (0.6)%
 Net debt to EBITDA(2)                           nm                nm       nm
 Available seat kilometres (ASK million)         49,080            14,796   nm
 Passenger revenue per ASK (€ cents)             5.41              3.07     76.3 %
 Non-fuel costs per ASK (€ cents)                6.66              12.29    (45.8)%
 For definitions refer to the IAG Annual report and accounts 2021.

 Cash comprises cash, cash equivalents and interest-bearing deposits.
 (1)The 2021 results have been restated for the treatment of administration
 costs associated with the Group's defined benefit pension schemes, which
 increased the operating loss and loss after tax for the three months to March
 31, 2021 by €9 million and €7 million, respectively. Further information
 is given in the IAG Annual report and accounts 2021.
 (2)The prior year comparative is December 31, 2021.

Luis Gallego, IAG Chief Executive Officer, said:

 

"Demand is recovering strongly in line with our previous expectations. We
expect to be profitable from the second quarter onwards and for the full year.

 

"Premium leisure continues to be the strongest performing segment and business
travel is at its highest level since the start of the pandemic.

 

"As a result of the increasing demand, forward bookings remain encouraging. We
expect to achieve 80% of 2019 capacity in the second quarter and 85% in the
third quarter. North Atlantic capacity will be close to fully restored in the
third quarter.

 

"The Group's operating loss reduced significantly in the first quarter
compared to last year, with our losses reflecting normal seasonality, the
impact of Omicron and costs associated with ramping up operations.

 

"Globally the travel industry is facing challenges as a result of the biggest
scaling up in operations in history and British Airways is no exception. The
welcome removal of UK's stringent travel restrictions, combined with strong
pent-up demand, have contributed to a steep ramp up in capacity. The airline's
focus at the moment is on improving operations and customer experience and
enhancing operational resilience.

 

"We're proud that our leadership in tackling climate change continues to be
recognised at a global level. The Transition Pathway Initiative (TPI) has
awarded us its highest ranking for carbon performance. It rated IAG in the top
3% of almost 500 businesses for its alignment to scientific targets."

 

Trading outlook

 

IAG expects its operating result to be profitable from quarter two, leading
both operating profit and net cash flows from operating activities to be
positive for the year.

 

 

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", "may", "will",
"could", "should", "intends", "plans", "predicts", "envisages" or
"anticipates" or other words of similar meaning. 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 and divestments relating to the Group and
discussions of the Group's business plan. 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, the effects of the COVID-19 pandemic and uncertainties about its
impact and duration, 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 2021; 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. Many of these risks are, and will be,
exacerbated by the COVID-19 pandemic and any further disruption to the global
airline industry and economic environment as a result.

IAG Investor Relations

Waterside (HAA2),

PO Box 365,

Harmondsworth,

Middlesex,

UB7 0GB

 

Investor.relations@iairgroup.com

CONSOLIDATED INCOME STATEMENT

 

                                               Three months to March 31
 € million                                     2022       2021(1)    Higher/

                                                                     (lower)

 Passenger revenue                             2,655      459        nm
 Cargo revenue                                 432        350        23.4 %
 Other revenue                                 348        159        nm
 Total revenue                                 3,435      968        nm

 Employee costs                                1,045      631        65.6 %
 Fuel, oil costs and emissions charges         918        226        nm
 Handling, catering and other operating costs  542        173        nm
 Landing fees and en-route charges             358        127        nm
 Engineering and other aircraft costs          375        207        81.2 %
 Property, IT and other costs                  204        184        10.9 %
 Selling costs                                 201        70         nm
 Depreciation, amortisation and impairment     531        470        13.0 %
 Currency differences                          (8)        (43)       (81.4)%
 Total expenditure on operations               4,166      2,045      nm
 Operating loss                                (731)      (1,077)    (32.1)%

 Finance costs                                 (233)      (177)      31.6 %
 Finance income                                1          3          (66.7)%
 Net change in fair value of convertible bond  60         -          nm
 Net financing credit relating to pensions     7          1          nm
 Net currency retranslation charges            (61)       (13)       nm
 Other non-operating credits                   41         40         2.5 %
 Total net non-operating costs                 (185)      (146)      26.7 %
 Loss before tax                               (916)      (1,223)    (25.1)%
 Tax                                           129        149        (13.4)%
 Loss after tax for the period                 (787)      (1,074)    (26.7)%
 (1)The 2021 results have been restated for the treatment of administration
 costs associated with the Group's defined benefit pension schemes, which
 increased the operating loss and loss after tax for the three months to March
 31, 2021 by €9 million and €7 million, respectively. Further information
 is given in the IAG Annual report and accounts 2021.

ALTERNATIVE PERFORMANCE MEASURES

All figures in the tables below are before exceptional items.

                                                           Three months to March 31
                                                           Before exceptional items
 € million                                                 2022       2021(1)    Higher/

                                                                                 (lower)(1)

 Passenger revenue                                         2,655      454        nm
 Cargo revenue                                             432        350        23.4 %
 Other revenue                                             348        159        nm
 Total revenue before exceptional items                    3,435      963        nm

 Employee costs                                            1,045      631        65.6 %
 Fuel, oil costs and emissions charges                     918        288        nm
 Handling, catering and other operating costs              542        173        nm
 Landing fees and en-route charges                         358        127        nm
 Engineering and other aircraft costs                      375        207        81.2 %
 Property, IT and other costs                              227        184        23.4 %
 Selling costs                                             201        70         nm
 Depreciation, amortisation and impairment                 531        470        13.0 %
 Currency differences                                      (8)        (43)       (81.4)%
 Total expenditure on operations before exceptional items  4,189      2,107      98.8 %
 Operating loss before exceptional items                   (754)      (1,144)    (34.1)%

 Finance costs                                             (233)      (177)      31.6 %
 Finance income                                            1          3          (66.7)%
 Net change in fair value of convertible bond              60         -          nm
 Net financing credit relating to pensions                 7          1          nm
 Net currency retranslation charges                        (61)       (13)       nm
 Other non-operating credits                               41         40         2.5 %
 Total net non-operating costs                             (185)      (146)      26.7 %
 Loss before tax before exceptional items                  (939)      (1,290)    (27.2)%
 Tax                                                       129        159        (18.9)%
 Loss after tax for the period before exceptional items    (810)      (1,131)    (28.4)%

 ( )Operating figures                                      2022(2)    2021(1,2)  Higher/

                                                                                 (lower)
 Available seat kilometres (ASK million)                   49,080     14,796     nm
 Revenue passenger kilometres (RPK million)                35,432     6,779      nm
 Seat factor (per cent)                                    72.2       45.8       26.4 pts
 Passenger numbers (thousands)                             14,377     2,612      nm
 Cargo tonne kilometres (CTK million)                      990        854        15.9 %
 Sold cargo tonnes (thousands)                             139        117        18.8 %
 Sectors                                                   107,700    27,700     nm
 Block hours (hours)                                       322,084    108,908    nm
 Average manpower equivalent(3)                            52,569     50,934     3.2 %
 Aircraft in service                                       536        531        0.9 %
 Passenger revenue per RPK (€ cents)                       7.49       6.70       11.9 %
 Passenger revenue per ASK (€ cents)                       5.41       3.07       76.3 %
 Cargo revenue per CTK (€ cents)                           43.64      40.98      6.5 %
 Fuel cost per ASK (€ cents)                               1.87       1.95       (3.9)%
 Non-fuel costs per ASK (€ cents)                          6.66       12.29      (45.8)%
 Total cost per ASK (€ cents)                              8.54       14.24      (40.1)%
 (1)The 2021 results have been restated for the treatment of administration
 costs associated with the Group's defined benefit pension schemes, which
 increased the operating loss and loss after tax before exceptional items for
 the three months to March 31, 2021 by €9 million and €7 million,
 respectively. Further information is given in the IAG Annual report and
 accounts 2021.
 (2)Financial ratios are before exceptional items.
 (3)Included in the average manpower equivalent are staff on furlough, wage
 support and equivalent schemes, including the Temporary Redundancy Plan
 arrangements in Spain.

Developments since last report (February 25, 2022)

On March 4, Aer Lingus signed an agreement with the Ireland Strategic
Investment Fund (ISIF) for an additional €200 million three-year debt
facility, backed by security over Heathrow landing rights, if drawn. This is
the second facility agreed between ISIF and Aer Lingus, building on a €150
million debt facility agreed in December 2020 and drawn in 2020 and 2021. The
further €200 million facility remains undrawn and is available through to
2025.

 

On March 17, IAG and Globalia announced they had reached an agreement under
which IAG will make a €100 million seven-year unsecured loan to Globalia.
Subject to any relevant regulatory approvals, IAG will have the option to
convert the loan into an up to 20 per cent equity stake in Air Europa. The
agreement is conditional on Globalia receiving approvals from the syndicated
banks that have provided it with a loan, which was partially guaranteed by the
Instituto de Crédito Oficial (ICO), and from Sociedad Estatal de
Participaciones Industriales (SEPI). The agreement provides for a period of
exclusivity of one year while discussions take place and this is accompanied
by a right to match any third party offer for the airline in the next three
years, together with a right to exit alongside Globalia should it sell Air
Europa at any time in the future.

 

On April 12, IAG agreed sustainability-linked financing for Iberia for two
Airbus A350-900 and three Airbus A320 neo aircraft, which were delivered in
quarter 1; the financing will be drawn down in quarter 2, 2022 and covers the
full cost of the aircraft.

 

Basis of preparation

Based on the extensive modelling the Group has undertaken in light of the
COVID-19 pandemic, including considering plausible but severe downside
scenarios, the Directors have a reasonable expectation that the Group has
sufficient liquidity for the going concern assessment period to June 30, 2023
and accordingly the Directors have adopted the going concern basis in
preparing the consolidated financial statements.

 

There are a number of significant factors related to the status and impact of
COVID-19 worldwide that are outside of the control of the Group. These include
the emergence of new variants of the virus and potential resurgence of
existing strains of the virus; the speed at which vaccines are deployed
worldwide; the efficacy of those vaccines; the availability of medicines to
combat the impact of the virus and the restrictions imposed by national
governments in respect of the freedom of movement and travel. Due to the
uncertainty that these factors create, the Directors are not able to provide
certainty that there could not be more severe downside scenarios than those
that have been considered in the modelling, including the sensitivities the
Group has considered in relation to factors such as the impact on yield,
capacity operated, cost mitigations achieved and the availability of aircraft
financing to offset capital expenditure. In the event that such a scenario
were to occur, the Group may need to secure sufficient additional funding over
and above that which is contractually committed as at May 5, 2022.

 

The Group has been successful in raising financing since the outbreak of
COVID-19, having financed all aircraft deliveries in 2020 and 2021 and the
Group continues to secure aircraft financing on long-term arrangements. In
addition to aircraft financing, the Group raised €5.5 billion of
non-aircraft related debt in 2020 and 2021, plus a fully-subscribed equity
raise of €2.7 billion in 2020. The Group has also negotiated and executed
€3.0 billion of committed general facilities since the start of 2021; these
facilities were undrawn as at May 5, 2022 and would be available over the
going concern period. However, the Directors cannot provide certainty that the
Group will be able to secure additional funding, if required, in the event
that a more severe downside scenario than those they have considered were to
occur and accordingly this represents a material uncertainty that could cast
doubts upon the Group's ability to continue as a going concern.

 

Principal risks and uncertainties

The Group has continued to operate its framework and processes to identify,
assess and manage risk and prioritise investment to address the risks it
faces. The principal risks and uncertainties affecting the Group are detailed
on pages 100 to 121 of the 2021 Annual Report and Accounts and these remain
relevant. The Board has continued to monitor and assess risks across the Group
in the light of changes that influence the Group and the aviation industry.
Mitigating actions have been identified to enable the Group to continue to
respond as necessary to managing the risk environment, particularly around
manpower, IT obsolescence and the impact of the war in Ukraine.

 

Operating and market environment

Average commodity fuel prices for the quarter were significantly higher than
in the previous year, with the spot fuel price rising significantly within the
quarter, from $700 per metric tonne at the start of January to $1,135 at the
end of March, compared with an average of approximately $500 per metric tonne
in quarter 1, 2021.

 

The US dollar was 7 per cent stronger against the euro and 2 per cent stronger
against the pound sterling, compared with the same quarter in 2021.

 

The net impact of translation and transaction exchange for the Group was €90
million adverse.

 

IAG's results are impacted by exchange rates used for the translation of
British Airways' and IAG Loyalty's financial results from sterling to the
Group's reporting currency of euro. For the three months, the net impact of
translation was €26 million adverse.

 

From a transactional perspective, the Group's financial performance is
impacted by fluctuations in exchange rates, primarily from the US dollar, euro
and pound sterling. The Group generates a surplus in most currencies in which
it does business, except for the US dollar, as capital expenditure, debt
repayments and fuel purchases typically create a deficit. The Group hedges a
portion of its transaction exposures. The net transaction impact on the
operating result was adverse by €64 million for the period, increasing
revenues by €23 million and costs by €87 million.

Capacity

In the first three months of 2022, IAG capacity, measured in available seat
kilometres (ASKs) reached 65.1 per cent of that operated in quarter 1, 2019, a
significant increase on the 19.6 per cent of 2019 operated in quarter 1, 2021.
The impact of COVID-19 and related travel restrictions was significantly less
than at the start of 2021, when many countries were in lockdown or had severe
travel restrictions in place. During quarter 1, capacity continued to be
restored ahead of the Summer 2022 flying season. Load factor reached 72.2 per
cent, the highest quarterly load factor since the COVID-19 pandemic began and
only 8.5 percentage points lower versus 2019. There was some impact from the
Omicron variant of COVID-19, particularly in January and February.

 

Revenue

Passenger revenue rose €2,196 million from quarter 1, 2021 to €2,655
million, reflecting the significant increase in capacity operated, together
with the positive impact of a 26.4 percentage point increase in the passenger
load factor and passenger yields per revenue passenger kilometre (RPK) up 11.9
per cent. The resulting passenger unit revenue (passenger revenue per ASK) was
76.3 per cent higher than the previous year and up to 88 per cent of that seen
in quarter 1, 2019.

 

Cargo revenue was up €82 million to €432 million, 23.4 per cent higher
than in quarter 1, 2021, despite only 287 cargo flights operated in the
quarter, down from 1,306 in quarter 1, 2021, due to the increase passenger
capacity operated. Yields increased 6.5 per cent on 2021, supported by
continued global supply chain disruption. Cargo carried, measured in cargo
tonne kilometres (CTKs), rose by 15.9 per cent. Cargo revenue was up €157
million, or 57.1 per cent versus the same period in 2019.

 

Other revenue increased by €189 million to €348 million, reflecting
recovery in the Group's non-airline businesses, including BA Holidays,
Iberia's third party handling business and IAG Loyalty. Other revenue also
reached 88 per cent of the level seen in quarter 1, 2019.

 

Costs

Costs were impacted by the significant increase in capacity versus 2021 and
the need to complete training and maintenance activities ahead of the Group
airlines' Summer flying programmes.

 

Employee costs increased by €414 million versus quarter 1, 2021 to €1,045
million, with only minimal use of government wage support and related schemes
in quarter 1, 2022, as staff were required to resource the quarter 1 flying
programme, or for training and preparation ahead of the Summer flying season.

 

Fuel costs increased by €692 million to €918 million. The impact of the
increase in commodity fuel price was mainly seen in March and the impact was
reduced by the Group's hedging programme. Fuel costs benefitted from the
reduced volume of cargo flights versus the previous year.

 

Supplier costs increased by €954 million to €1,672 million, mainly linked
to the increase in capacity operated, together with inflationary increases,
partly offset by the Group's procurement initiatives.

 

Depreciation, amortisation and impairment costs increased to €531 million,
partly driven by aircraft deliveries during 2021 and the first quarter of
2022.

 

Operating result

The Group's operating loss for the period was €731 million, a decrease of
€346 million versus 2021. Excluding exceptional items the operating loss was
down €390 million versus the previous year, at €754 million.

 

Exceptional items

The quarter includes an exceptional credit of €23 million relating to the
partial reversal of the fine previously issued by the European Commission, in
2010, to British Airways. In 2021, quarter 1 included gains on those fuel and
foreign exchange hedges de-recognised in 2020, totalling €67 million. See
Reconciliation of Alternative performance measures for further information.

 

Net non-operating costs, taxation and loss after tax

The Group's net non-operating costs for the quarter were €185 million in
2022, compared with €146 million in 2021, mainly reflecting the impact of
non-aircraft debt raised during 2021.

 

The tax credit for the period was €129 million, with an effective tax rate
for the Group of 14 per cent (2021: 12 per cent). The substantial majority of
the Group's activities are taxed where the main operations are based, in the
UK, Spain and Ireland, with corporation tax rates during 2022 of 19 per cent,
25 per cent and 12.5 per cent respectively; these result in an expected
effective tax rate of 20 per cent. The difference between the actual effective
tax rate of 14 per cent and the expected effective tax rate of 20 per cent is
primarily due to certain current period losses in Iberia and Vueling not being
recognised offset by a credit in British Airways arising from full recognition
of current period losses and the net impact of the increase in the UK rate
from 19 to 25 per cent from April 2023.

 

The loss after tax for the quarter was €787 million (2021: €1,074
million).

Cash, liquidity and leverage

The Group's cash balance of €8,184 million at March 31, 2022 was up €241
million on December 31, 2021. Nine aircraft were delivered in the quarter
(three Airbus A350-900s, three Airbus A350-1000s and three Airbus A320 neos),
although of these only one Airbus A350-900 and one Airbus A350-1000 were
financed during the quarter. The financing for five of these aircraft (for
Iberia) was agreed on April 12 and will be drawn down during quarter 2; the
remaining two aircraft will be financed during the remainder of 2022.

 

Total liquidity at March 31, 2022 was €12,360 million, up from €11,986
million at December 31, 2021. Committed and undrawn general facilities were
€3,178 million (December 31, 2021: €2,917 million) and committed and
undrawn aircraft facilities €998 million (December 31, 2021: €1,126
million).

 

Net debt at the end of the quarter was €11,593 million, down €74 million
from December 31, 2021, with the cash inflow for bookings for future travel
periods offsetting capital expenditure.

RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES

 

Loss after tax before exceptional items

 

Exceptional items are those that in management's view need to be separately
disclosed by virtue of their size or incidence in understanding the entity's
financial performance.

 

The table below reconciles the reported Income statement to the Alternative
performance measures statement above:

 

                                           Three months to March 31
 € million                                 Reported 2022  Exceptional items  Before exceptional items 2022  Reported 2021(1)  Exceptional items  Before exceptional items 2021(1)

 Passenger revenue                         2,655          -                  2,655                          459               5                  454
 Cargo revenue                             432            -                  432                            350               -                  350
 Other revenue                             348            -                  348                            159               -                  159
 Total revenue                             3,435          -                  3,435                          968               5                  963

 Fuel, oil costs and emissions charges(3)  918            -                  918                            226               (62)               288
 Property, IT and other costs(2)           204            (23)               227                            184               -                  184
 Other operating charges                   3,044          -                  3,044                          1,635             -                  1,635
 Total expenditure on operations           4,166          (23)               4,189                          2,045             (62)               2,107
 Operating loss                            (731)          23                 (754)                          (1,077)           67                 (1,144)

 Total net non-operating costs             (185)          -                  (185)                          (146)             -                  (146)
 Loss before tax                           (916)          23                 (939)                          (1,223)           67                 (1,290)
 Tax                                       129            -                  129                            149               (10)               159
 Loss after tax for the period             (787)          23                 (810)                          (1,074)           57                 (1,131)
 ( )

 (1)The 2021 results have been restated for the treatment of administration
 costs associated with the Group's defined benefit pension schemes, which
 increased the operating loss and loss after tax before exceptional items for
 the three months to March 31, 2021 by €9 million and €7 million,
 respectively. Further information is given in the IAG Annual report and
 accounts 2021.

 (2)The exceptional credit of €23 million relates to the partial reversal of
 the fine, plus accrued interest, initially issued by the European Commission,
 in 2010, to British Airways regarding its involvement in cartel activity in
 the air cargo sector and that had been recognised as an exceptional charge.
 The exceptional credit has been recorded within Property, IT and other costs
 in the Income statement with no resultant tax charge arising.

 (3)The exceptional credits in 2021 reflected in Fuel, oil costs and emissions
 charges of €62 million and to Passenger revenue of €5 million related to
 the derecognition of hedge accounting of the associated fuel derivatives and
 the foreign currency derivatives on forecast revenue and fuel consumption.
 These amounts arose from the substantial deterioration in demand for air
 travel caused by the COVID-19 outbreak, which caused a significant level of
 hedged fuel purchases in US dollars and hedged passenger revenue transactions
 in a variety of foreign currencies to no longer be expected to occur based on
 the Group's operating forecasts prevailing at the balance sheet date. The
 credit related to revenue derivatives and fuel derivatives was recorded in the
 Income statement within Passenger revenue and Fuel, oil and emission charges,
 respectively. The related tax charge was €10 million.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  QRFEASSKEESAEEA