IAG results presentation Full Year 2019 28 February 2020 2019 - PowerPoint PPT Presentation

IAG results presentation Full Year 2019 28 February 2020

2019 Highlights Willie Walsh, Chief Executive Officer

Continued progress against strategic objectives FY 2019 strategic highlights • Strengthen portfolio of world-class brands and operations − Announced planned acquisition of Air Europa, subject to regulatory approvals − British Airways new Club Suite on 5 aircraft (4 A350s, 1 B777) and in-flight product enhancements (amenities, catering, new World Traveller Plus seat, Wi-Fi rollout. Revamped lounges – Geneva, Johannesburg, Milan, New York JFK, SFO − Iberia Madrid lounge refurbishment and completion of premium economy long-haul rollout − Strong NPS increase by 9.5 points to 25.8, driven by British Airways and Vueling, target of 33 by 2022 − LEVEL expansion at Barcelona and roll-out to Amsterdam • Grow global leadership positions − North America traffic (RPK) growth of 3.6% − New destinations – Charleston (BA), Minneapolis (Aer Lingus), Pittsburgh (BA) − LEVEL – new route Barcelona to New York − Latin America and Caribbean traffic growth of 15.6% − Iberia - higher frequencies on existing routes − LEVEL – new route Barcelona to Santiago − British Airways – increased economy seating ex-LGW on Caribbean routes − Intra-Europe traffic growth of 3.8% - Domestic +10.1% (mainly Spain), Europe +2.2% − Asia traffic growth of 5.0% – British Airways new routes to Islamabad and Osaka, signed joint business agreement with China Southern Airlines • Enhance IAG’s common integrated platforms − Launched ‘Flightpath net zero’ carbon emissions by 2050 − 39 new generation aircraft delivered in 2019: 8 A350s, 21 A320 NEOs, 7 A321 NEOs, 3 A321 NEO LRs − 22 old generation aircraft retired or returned − Orders for 18 B777-9s plus 24 options for delivery 2022-2025 and 14 A321XLRs from 2023 (6 Aer Lingus, 8 Iberia) − Signed letter of intent for 200 B737s for delivery 2023-2027 (BA LGW and Vueling) − NDC/API distribution – highest IATA@scale NDC certification (>20% of indirect bookings via NDC) 3 − IAGTech launch – new IT management (CIO), operating model and governance structure

Good underlying financial performance in 2019 and 4Q 2019 FY 2019 financial highlights • FY19 operating profit of €3,285m (12.9% margin) compared to €3,485m (14.4%) in 2018 • Negatively affected by €170m due to the BA pilots’ strikes and Heathrow disruption • Despite a fuel headwind of €738m (+14% on +4% ASK increase) • Passenger unit revenue of -0.5% at constant currency and airline non-fuel unit cost of -0.9% at constant currency, in line with guidance given in 26 September trading update • Adjusted EPS (pre-exceptional) growth of +1.7% • 4Q 2019 operating profit of €765m (12.3% margin), 7% higher than €715m (11.9%) in 4Q 2018 • Aer Lingus (6.2%) and British Airways (16.0%) higher margin than a year ago, Iberia (8.0%) the same and Vueling (0.9%) lower • RoIC of 14.7% slightly below IAG’s 15% target but would have been 15.4% excluding the BA pilots’ strikes • Carbon efficiency improvement in 2019 of 1.9% (to 89.8 from 91.5g CO 2 /pkm in 2018) • Shareholder cash returns • In 2019, IAG returned €1.3 billion of cash to shareholders, including €695m in special dividends • The IAG Board is recommending a total ordinary dividend in respect of the 2019 financial year of 31.5 € cents per share, an i ncrease compared to 31.0 € cents per share in respect of 2018 • In view of the potential acquisition of Air Europa, the Board is not recommending additional cash returns in 2020 at this stage 4

RoIC slightly short of target, operating margin in line FY 2019 financial highlights 1,496 16.9% 14.7% 736 Levered RoIC free cash flow (%) (€m) 2018 2019 2018 2019 pro forma Targeting €2.1bn p.a Targeting sustainable 15% average 2020-2022 14.4% 116.8 12.9% 114.9 Adjusted Operating +1.7% EPS margin (€ cents) (%) 2018 2019 2018 2019 pro forma pro forma Targeting 10%+ growth Targeting 12%-15% average 2020-2022 Pro forma financial information is based on the Group’s restated statutory results with an adjustment to reflect the estimated impact of IFRS 16 ‘Leases’ from 1 January 2018. The 2018 results have been restated to reclassify the costs the Group incurs in relation to compensation for flight delays and cancellations as a deduction from revenue as opposed to 5 an operating expense. There is no change in operating profit.

Financial results Steve Gunning, Chief Financial Officer

Good FY19 results in a year affected by disruption and higher fuel costs FY 2019 financial summary OPERATING PROFIT TOTAL UNIT REVENUE PAX UNIT REVENUE €3,285m -0.4% -0.5% (reported before exceptional) (constant currency) (constant currency) - €267m +1.1% (constant currency change) +1.0% (reported) - €200m (€68m translation benefit) (reported) (€325m transaction tailwind) (reported change) TRAFFIC/CAPACITY TOTAL UNIT COST NON-FUEL UNIT COST -0.1% +1.4% ASKs: +4.0% (constant currency pro forma) (reported) (constant currency pro forma) -0.9% +2.9% (airline constant currency pro forma) RPKs: +5.6% (reported change vs. 2018 pro forma) (reported) (€58m translation drag) +0.6% (€268m transaction headwind) (reported change vs. 2018 pro forma) ‘Translation’ = drag/benefit from translation of British Airways and Avios financial results from GBP into EUR; ‘Transaction’ = FX headwind/tailwind at company level Pro forma financial information is based on the Group’s restated statutory results with an adjustment to reflect the estimated impact of IFRS 16 ‘Leases’ from 1 January 2018. The 2018 results have been restated to reclassify the costs the Group incurs in relation to compensation for flight delays and cancellations as a deduction from revenue as opposed to an 7 7 operating expense. There is no change in operating profit. See definition of airline non-fuel unit costs in appendices.

Strong 4Q operating profit despite strikes affecting bookings 4Q 2019 financial summary OPERATING PROFIT TOTAL UNIT REVENUE PAX UNIT REVENUE €765m -1.2% -0.4% (reported before exceptional) (constant currency) (constant currency) - €29m +1.4% (constant currency change) +2.2% (reported) +€50m (€87m translation benefit) (reported) (€70m transaction tailwind) (reported change) TRAFFIC/CAPACITY TOTAL UNIT COST NON-FUEL UNIT COST -1.6% -0.5% ASKs: +1.9% (constant currency pro forma) (reported) (constant currency pro forma) -1.7% +0.9% (airline constant currency pro forma) RPKs: +5.4% (reported change vs. 2018 pro forma) (reported) (€73m translation drag) -0.7% (€5m transaction headwind) (reported change vs. 2018 pro forma) ‘Translation’ = drag/benefit from translation of British Airways and Avios financial results from GBP into EUR; ‘Transaction’ = FX headwind/tailwind at company level Pro forma financial information is based on the Group’s restated statutory results with an adjustment to reflect the estimated impact of IFRS 16 ‘Leases’ from 1 January 2018. The 2018 results have been restated to reclassify the costs the Group incurs in relation to compensation for flight delays and cancellations as a deduction from revenue as opposed to an 8 operating expense. There is no change in operating profit. See definition of airline non-fuel unit costs in appendices.

Mixed regional revenue performance 4Q 2019 revenue performance by region Domestic Domestic +8.0% -2.6% North America North America +1.0% -2.4% Europe Europe -1.9% +1.7% ASK PRASK +1.9% -0.4% Asia Asia Pacific Pacific Latin America +1.7% +2.4% Latin America & Caribbean & Caribbean AMESA AMESA +7.7% -3.4% -0.1% +4.8% Regional data in the chart represents flown passenger revenue in unit terms at constant currency before transfer payments, Avios redemption and ancillaries 9 9

Strong unit cost control 4Q 2019 unit cost performance 4Q 2018 4Q 2019 % vly pro forma unit costs reported unit costs % vly constant currency ( € cents) ( € cents) Employee 1.52 1.52 0.2% -1.2% 2.75 2.67 -2.7% -3.1% Supplier Airline non-fuel Fuel efficiency unit cost 0.64 0.68 5.7% +4.2% Ownership (fuel burn per ASK) -1.7% -1.6% Non-fuel 4.91 4.87 -0.7% -1.6% (constant currency (12 months rolling) pro forma) 1.68 1.77 5.6% +2.4% Fuel TOTAL 6.59 6.64 0.9% -0.5% ‘Translation’ = drag/benefit from translation of British Airways and Avios financial results from GBP into EUR; ‘Transaction’ = FX headwind/tailwind at company level Pro forma financial information is based on the Group’s restated statutory results with an adjustment to reflect the estimated impact of IFRS 16 ‘Leases’ from 1 January 2018. The 2018 results have been restated to reclassify the costs the Group incurs in relation to compensation for flight delays and cancellations as a deduction from revenue as opposed to an 10 operating expense. There is no change in operating profit. See definition of airline non-fuel unit costs in appendices.