International Airlines Group – Capital Markets Day 2019 Friday, 8 th November 2019
International Airlines Group – Capital Markets Day 2019 Friday, 9 th November 2019 Opening Remarks Antonio Vázquez Chairman, International Airlines Group Good morning, everybody. I am happy to welcome you to the Capital Market Day of IAG, and I am happy to be with three non-executive directors with us, our Senior Independent Director, Alberto Terol, and Javier Ferrán and Marc Bolland. We are happy to be with the management here and sharing this important morning with you. We announced an interim dividend at 3Q19 results last week of 14.5 euro cents, which is exactly the same than a year ago, despite a slight fall in our net income due to the BA pilot strike and disruptions. This demonstrated the confidence of the Board not only in the way in which the company is going, but in the outcome of the company and the financial strength of our company. Including this interim dividend that is payable in early December, we will have returned € 1.31 billion in cash to our shareholders along the year 2019. In total, we will have returned €4 billion to the shareholder s over the five years between 2015 and 2019. Regarding the use of excess capital, the Board will routinely evaluate shareholder return in the context of growth and M&A opportunities. As far as M&A is concerned, it has been a busy year. At the beginning of the year, we did announce that we discontinued our interest in Norwegian Air Shuttle, because at that point in time we did consider the transaction was too risky. And last Monday we were happy to announce our intention to acquire Air Europa, which is basically a local operator in Spain and Latin America. Luis Gallego is the CEO for Iberia. He is going to talk about it afterward. As far as the Board of Directors is concerned, this year, in our ongoing refreshment activity of the Board, we have appointed three new board members, two non-executive. Margaret Ewing, who brings into the Board very, very significant financial experience, having been partner and vice chairman of Deloitte for a while, and also transport experience because she has been CFO of BAA, which was a former Heathrow company. Javier Ferrán has incorporated as well to our Board. Javier is bringing very good experience in consumer goods customers and a very, very long experience, and he is bringing as well a very solid experience and background as a CEO and chairman of big listed entities. Javier is currently the chairman of Diageo. Last but not least, the incorporation of our Board of Steve Gunning as an Executive Director, replacing Enrique as the CFO of the company. Most of you know Steve, and after today everybody will know Steve very well. I hope that we will remember Steve quite properly. On Brexit, we have informed that we have submitted remedial plans to our national airline regulators in Spain, in France, in Dublin in Ireland, and in Austria which basically are dealing with the requirement of having contingency plans well prepared for the post-Brexit situation, and the assessment has been positive in the way that they all say that if we put in place the plans that we have presented, we will comply with the EU ownership and control requirement post Brexit. As well as the permitted maximum is concerned, we put it in place and we implemented it in the month of February. I realised, and we realised – the management and the Board and 2
International Airlines Group – Capital Markets Day 2019 Friday, 9 th November 2019 everybody – that it is not an ideal situation, and we continue to evaluate the way to address it. The only thing I can assure right now is that the Board and the management is absolutely committed to removing the permitted maximum at the appropriate time. I hope you will enjoy today’s presentation from the IAG leadership team. I think you will conclude at the end of this presentation that IAG is a unique, compelling investment case. I give the floor to Willie. Thank you for coming. Strategic Investment Case Willie Walsh CEO, International Airlines Group Thank you. Thank you, Antonio, and good morning, everyone. Thank you for joining us, and welcome back to those of you who have been with us here before. As Andrew said, the agenda today has been driven by the feedback that you have given us. The format is also as a result of the feedback that you have given us. We recognise that not all of the issues that you have asked as to deal with and can be dealt with in terms of formal presentations, but we will have an opportunity at the end with plenty of time for you to ask questions on any of the issues that are covered or issues that may not have been covered that you would like us to address. Now, before I hand over to Alistair, I just want to remind you a little bit about what it is IAG has done, what we are doing today, and then Alistair and the rest of the presentations will take you through what it is we are going to do going forward. We have talked for some time about the unique structure that we have within IAG, which enables us to focus on key areas to ensure that we are the most efficient airline group in the business. We ’ ve got the right people in the right places with the right portfolio of brands, operating in the right demand segments, and we are able to ensure that we cover all of the opportunities that are available to us in the market. Through this structure, we have been able to develop sustainable returns to drive transformation where transformation has been required and to ensure that we reward and remunerate our shareholders, and we intend to continue to do that going forward. Now, you can see that transformation has led us to deliver operating margins that are well in excess of what people believed was possible for, especially legacy airlines in this industry. And we believe that those margins are sustainable, and Steve will take you through the plans for the next few years which will demonstrate that these margins will, once again, be achieved by the business. We are also delivering industry-leading returns on invested capital and, as you know, this has been a real focus area of IAG. We believe that this is something that the industry has started to focus on. I have often pointed to the change that I can date back to 2008 where you see more and more industry leaders focused on this issue and more and more industry leaders talking about the need to deliver real returns on investor capital. This is one of the real strengths of IAG, in that we can ensure that the capital that we assign to the operating companies within the business is done in the most efficient way to drive healthy competition 3
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