International Consolidated Airlines Group passenger capacity continues to be adversely affected by COVID-19 pandemic

International Consolidated Airlines Group plc (LON:IAG) has presented Group consolidated results for the three months to March 31, 2021.

COVID-19 situation and management actions:

·      Passenger capacity in quarter 1 was 19.6 per cent of 2019 and continues to be adversely affected by the COVID-19 pandemic, together with government restrictions and quarantine requirements

·      Current passenger capacity plans for quarter 2 are for around 25 per cent of 2019 capacity, but remain uncertain and subject to review

·      1,306 cargo-only flights operated in quarter 1, up from 969 in quarter 4, 2020

·      Strong liquidity, increased to €10.5 billion at the end of the quarter (from total pro-forma liquidity of €10.3 billion at December 31, 2020), driven by successful conclusion of financing initiatives in the quarter, together with cost actions and UK pension contribution deferral. These included:

·      Drawdown of previously committed borrowing for British Airways (£2.0 billion UK Export Finance) and Aer Lingus (€75 million drawn against Ireland Strategic Investment Fund facility)

·      Additional €1.2 billion of IAG Senior Unsecured Bonds issued, with issue heavily oversubscribed

·      New 3-year $1.755 billion committed, secured revolving credit facility concluded for Aer Lingus, British Airways and Iberia and which remains undrawn; cancellation of British Airways’ previous revolving credit facility scheduled to mature in June 2021 (value at December 31, 2020: $0.8 billion)

·      Agreement for British Airways to defer monthly pension deficit contributions totalling £450 million between October 2020 and September 2021

·      Cash operating costs for the quarter reduced to €175 million per week

IAG period highlights on results:

·      First quarter operating loss €1,068 million (2020: operating loss €1,860 million) and operating loss before exceptional items €1,135 million (2020: operating loss before exceptional items €535 million)

·      Exceptional credit before tax in the quarter of €67 million on discontinuance of fuel and foreign exchange hedge accounting (2020: exceptional charge before tax of €1,325 million on discontinuance of fuel and foreign exchange hedge accounting)

·      Loss after tax and exceptional items for the quarter €1,067 million (2020: loss €1,683 million) and loss after tax before exceptional items: €1,124 million (2020: loss €556 million)

·      Cash of €8.0 billion at March 31, 2021 up €2.1 billion on December 31, 2020. Committed and undrawn general and aircraft facilities of €2.5 billion, bringing total liquidity to €10.5 billion.

Performance summary:

For definitions refer to the IAG Annual report and accounts 2020.

Cash comprises cash, cash equivalents and interest-bearing deposits.

¹The loss per share information for the three months to March 31, 2020 has been restated to reflect the impact of the rights issue.

²The prior year comparative is December 31, 2020.

Trading outlook

Given the uncertainty over the timing of the lifting of government travel restrictions and the continued impact and duration of COVID-19, IAG is not providing profit guidance for 2021.

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

“In quarter 1, we’re reporting an operating loss of €1,135 million before exceptional items compared to an operating loss of €535 million last year.

 “We’ve acted decisively to build resilience by boosting liquidity and reducing our cost base. At March 31, the Group’s liquidity increased to €10.5 billion which demonstrates IAG’s good access to capital markets.

“Cargo has enabled us to operate a more extensive passenger longhaul network. In addition, we operated 1,306 cargo-only flights and generated €350 million in revenue, a record for quarter 1.

“We’re taking all necessary actions to ensure the financial health of our business for the long-term, including last year’s successful €2.7 billion capital increase, and remain focused on reducing our cost base and increasing efficiencies.

“Despite the challenges posed by the current pandemic, our focus on the safety of our people and customers remains paramount alongside our climate commitments. Our pledge to powering 10 per cent of our flights with sustainable aviation fuel by 2030 shows that we will not back down from our ambition to lead aviation’s efforts to reduce its carbon footprint.

“We’re doing everything in our power to emerge in a stronger competitive position. We’re absolutely confident that a safe re-start to travel can happen as shown by the scientific data. We’re ready to fly, but government action is needed through four key measures:

·      Travel corridors without restrictions between countries with successful vaccination rollouts and effective testing such us the UK and the US.

·      Affordable, simple and proportionate testing to replace quarantine and costly, multi-layered testing.

·      Well-staffed borders using contactless technology including e-gates to ensure a safe, smooth flow of people and frictionless travel.

·      Digital passes for testing and vaccination documentation to facilitate international travel.

“These measures will enable a safe re-opening of our skies. Travel underpins a global industry that supports 13 million jobs in Europe alone. There’s a high level of pent-up demand and aviation will play a critical role in reconnecting people and getting economies back up and running again.”