International Airlines Group reports strong Q1 results, well-positioned for summer

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International Consolidated Airlines Group (LON:IAG) has announced its Q1 2024 results.

Summary

• Strong demand across our airlines has driven higher revenue, positive unit revenue and, alongside our transformation benefits, increased operating profit in the first quarter of 2024

• Operating profit before exceptional items of €68 million (Q1 2023: €9 million), an increase of €59 million

• We continue to invest in our core markets, with 7.0% passenger capacity growth vs Q1 2023

• Non-fuel unit costs in the quarter were as expected. They reflect planned investment to deliver customer benefits and operational efficiency, as well as the annualised impact of 2023 pay deals; no change to expectations for the full year

• Our balance sheet continues to strengthen, benefitting from strong profit and cash performance as well as seasonality: net debt to EBITDA before exceptional items of 1.3 times (31 December 2023: 1.7 times, 31 March 2023: 2.1 times)

• We are well-positioned for the summer

Luis Gallego, International Consolidated Airlines Group Chief Executive Officer, said:

“Our transformation initiatives and increased demand, including over the Easter holidays, have delivered another very good set of results with improvements to both revenue and operating profit.

“Our Group benefits from the strength of our core markets – North Atlantic, South Atlantic and intra-Europe – and the performance of our brands. Investment across the Group in transformation is delivering encouraging improvements in punctuality and customer experience at our airlines. IAG Loyalty continues to perform very well.

“We are well-positioned for the summer. The high demand for travel is a continuing trend.”

Financial summary:

	Three months to 31 March
Reported results (€ million)	2024	2023
Total revenue	6,429	5,889
Operating profit	68	9
Loss after tax	(4)	(87)
Basic loss per share (€ cents)	(0.1)	(1.8)
Cash, cash equivalents and interest-bearing deposits¹	8,726	6,837
Borrowings¹	16,164	16,082

Alternative performance measures (€ million)	2024	2023
Total revenue before exceptional items	6,429	5,889
Operating profit before exceptional items	68	9
Operating margin before exceptional items	1.1%	0.2%
Loss after tax before exceptional items	(93)	(87)
Adjusted loss per share (€ cents)	(1.9)	(1.8)
Net debt¹	7,438	9,245
Net debt to EBITDA before exceptional items (times)¹	1.3	1.7
Total liquidity^{1, 2}	13,330	11,624

For definitions of Alternative performance measures, refer to IAG Annual report and accounts 2023.

1 The prior period comparative is 31 December 2023.

2 Total liquidity includes Cash, cash equivalents and interest-bearing deposits, plus committed and undrawn general and aircraft-specific financing facilities.

Financial highlights for the first quarter of 2024

• Passenger revenue per available seat kilometre (‘ASK’) for the first quarter was 4.4% higher than in the first quarter of 2023, through the benefit of the timing of Easter and a continued strong leisure traffic recovery, with business traffic recovering more slowly

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• Non-fuel unit costs increased by 3.7% versus quarter one 2023, driven by investments in the business and the impact of wage settlements agreed during the course of 2023

• Fuel unit cost was down 4.9% versus the first quarter of 2023, linked to lower effective average fuel prices net of hedging and the benefits of IAG’s more efficient aircraft deliveries

• Operating margin before exceptional items for the first quarter was 1.1%

• Loss after tax for the first quarter of €4 million (Q1 2023: loss after tax of €87 million)

• Net debt has reduced in the quarter to €7.4 billion (31 December 2023: €9.2 billion, 31 March 2023: €8.4 billion)

Strategic highlights

Trading and network

Three months to 31 March 2024	Proportion of total ASKs2024	ASKs higher/(lower) v2023	Passenger load factor (%)	Passengerload factorhigher/(lower)v2023	Passenger revenue per ASK higher/(lower) v2023¹
North Atlantic	28.7 %	0.6 %	77.8	3.0pts	6.5 %
Latin America and Caribbean	21.6 %	14.4 %	86.8	(0.1)pts	(1.4) %
Europe	23.6 %	9.0 %	84.3	1.7pts	5.7 %
Domestic (Spain and UK)	8.3 %	6.5 %	87.2	2.0pts	6.9 %
Africa, Middle East and South Asia	14.1 %	0.4 %	82.8	(0.1)pts	(3.4) %
Asia Pacific	3.7 %	43.4 %	87.3	(1.5)pts	(12.6) %
Total network	100.0 %	7.0 %	83.1	1.6pts	4.4 %

1 Passenger revenue per ASK for total network is based on total passenger revenue divided by ASKs. For the analysis by region, passenger revenue excludes certain items that are not directly assigned at a route level, including joint business payments or receipts, foreign exchange hedging gains or losses and adjustments to assumptions for unused tickets.

IAG increased capacity for the North Atlantic region by 0.6% in the first quarter, with incremental growth at Aer Lingus, British Airways and Iberia. Unit revenue increased by 6.5% with good demand in both the business and leisure segments.

The Group has continued to invest in the strongly growing Latin America and Caribbean region, mainly through Iberia, but also adding capacity at British Airways and LEVEL, delivering overall capacity growth of 14.4% in the first quarter. Continuing strong demand has supported pricing, with only a small unit decline of 1.4%, on top of the substantial capacity increase.

Our capacity growth to Europe was 9.0% in the first quarter, with growth in particular at Aer Lingus, British Airways and Iberia. The continuing demand for travel between major European cities across all of our airlines, in particular for leisure, as well as the benefit from the timing of the Easter weekend, has delivered unit revenue growth of 5.7%.

Our Domestic region (Spain and UK) capacity growth was 6.5% in the first quarter, mostly in Spain through Iberia and Vueling. As in the remainder of Europe, robust demand for travel and the Easter weekend has supported a unit revenue increase of 6.9%.

The rest of the world is currently more challenging. Capacity to the Africa, Middle East and South Asia region increased by 0.4% and unit revenues have declined by 3.4%. In particular the conflict in the Middle East has impacted flying by most of our airlines to the region. Our capacity to the Asia Pacific region, only 3.7% of our Group capacity, increased by 43.4%, mainly reflecting the annualisation of British Airways’ route restoration in 2023. This large capacity increase has led to a unit revenue decline of 12.6% in the quarter.

Other

On 1 April, BA Holidays transferred to IAG Loyalty. This will support BA Holidays’ ambitious growth strategy, add value to IAG Loyalty and deliver more for our customers and our airlines within IAG.

We continue to make progress through the Air Europa acquisition process and have presented a package of remedies to the European Commission. Our expectation remains for the process to complete later this year.

Outlook

• We expect positive long-term, sustainable demand for travel

• We are well-positioned for the summer

• Our full year capacity plans remain for around 7% ASK growth, with investment in our core markets

• We continue to expect non-fuel unit costs to increase slightly for the year as we continue to invest in the business

• We continue to expect to generate significant free cash flow and to maintain a strong balance sheet

• We are focused on our strategy to deliver world-class margins and returns

• International Consolidated Airlines Group are committed to sustainable shareholder value creation and cash returns