International Consolidated Airlines Group (IAG) presented Group consolidated results for the nine months to September 30, 2021.
COVID-19 situation and management actions:
- Passenger capacity in quarter 3 was 43.4 per cent of 2019, up from 21.9 per cent in quarter 2, as capacity rebuilds
- Current passenger capacity plans for quarter 4 are for around 60 per cent of 2019 capacity
- Cargo carried in quarter 3 was up 37.2 per cent on 2020, reaching 73.4 per cent of 2019 levels, despite a reduction in cargo-only flights as passenger capacity increased, with 657 cargo-only flights operated in the quarter compared with 1,371 in quarter 2
- Cash operating costs for quarter 3 of 260 million euros per week
- Strong liquidity of 10.6 billion euros at the end of quarter 3, up from 8.1 billion euros at December 31, 2020, comprised of cash of 7.6 billion euros and committed and undrawn general and aircraft facilities of 3.0 billion euros:
- Both cash and underlying debt stable since quarter 2, with the €0.2 billion increase in borrowings driven by translation of US dollar debt
- Increased liquidity driven by positive operating cash flow in quarter 3 and successful conclusion of financing initiatives since the start of the year, together with cost actions and UK pension contribution deferral
- In July sustainability-linked EETC financing of $785 million concluded for seven British Airways’ fleet deliveries for 2021 and 2022, with total financing remaining to be drawn of $685 million
- Additional £1.0 billion (1.2 billion euros) committed five-year credit facility executed for British Airways on November 1, 2021, partially guaranteed by UK Export Finance, which remains undrawn, resulting in total pro forma liquidity at the end of October of 12.1 billion euros, including an increase in cash to 8 billion euros.
IAG period highlights on results:
- Reported operating loss for the third quarter 452 million euros (2020 restated: operating loss 1,923 million euros) and operating loss before exceptional items 485 million euros (2020 restated1: operating loss before exceptional items 1,305 million euros)
- Reported operating loss for the nine months 2,487 million euros (2020 restated: operating loss 5,975 million euros), and operating loss before exceptional items 2,665 million euros (2020 restated1: operating loss before exceptional items 3,220 million euros)
- Exceptional credit before tax in the nine months of 178 million euros on discontinuance of fuel and foreign exchange hedge accounting and the reversal of the impairment of certain fleet assets (2020: exceptional charge before tax of 2,755 million euros on discontinuance of fuel and foreign exchange hedge accounting and impairment of fleet assets)
- Loss after tax and exceptional items for the nine months 2,622 million euros (2020 restated: loss 5,576 million euros) and loss after tax before exceptional items: 2,775 million euros (2020 restated1: loss 3,185 million euros).
Luis Gallego, IAG Chief Executive Officer, said: “I would like to thank our people, who have played such a central role in all that we have achieved in the face of the most challenging time for the industry. There’s a significant recovery underway and our teams across the Group are working hard to capture every opportunity. We continue to capitalise on surges in bookings when travel restrictions are lifted.
“All our airlines have shown improvements with the Group’s operating loss more than halved compared to previous quarters. In Q3, our operating cash flow was positive for the first time since the start of the pandemic and our liquidity is higher than ever, reaching 12.1 billion euros on a pro forma basis at the end of October.
“The full reopening of the transatlantic travel corridor from Monday is a pivotal moment for our industry. British Airways is serving more US destinations than any transatlantic carrier and we’re delighted that we can get our customers flying again.
“Longhaul traffic has been a significant driver of revenue, with bookings recovering faster than shorthaul as we head into the winter. Premium leisure is performing strongly at both Iberia and British Airways and there are early signs of a recovery in business travel.
“Iberia and Vueling continued to be the best performers within the Group in the third quarter. Iberia returned to profitability while Vueling reached breakeven at the operating level. Both seized opportunities to strengthen their positions on routes to Latin America and the Spanish domestic market.
“In the short term, we are focused on getting ready to operate as much capacity as we can and ensuring IAG is set up to return to profitability in 2022. Our teams are creating opportunities and implementing initiatives to transform our business and preparing it for the future so that we emerge more competitive. This includes initiatives such as our new shorthaul operation at Gatwick, Vueling’s expansion at Paris-Orly, Aer Lingus’ services from Manchester to the US and the Caribbean and our new maintenance model in Barcelona.
“We also remain resolute in our climate commitments. We’re transforming our business and driving change to create a truly sustainable airline industry. IAG has led the way by being the first airline group worldwide to commit to achieving net zero carbon emissions by 2050 and we welcome IATA’s recent announcement that the industry will join us in meeting this goal.”
Trading outlook
At current fuel prices and exchange rates, IAG expects its 2021 operating loss before exceptional items to be approximately 3.0 billion euros. Quarter 4 capacity, measured in ASKs, is expected to be approximately 60% of 2019, resulting in 2021 capacity of 37% of the 2019 level.