International Airlines Group return to profit with positive operating cash flow

International Airlines Group

International Consolidated Airlines Group SA (LON:IAG) has announced its full year results for 2022.

Strong recovery in profits in 2022

•  In 2022 we saw a strong recovery in our core markets as COVID-19 restrictions were lifted, which drove revenue momentum and a return to profit with significantly positive operating cash flow

•  Further recovery in profits expected in 2023, with full year operating profit before exceptional items expected to be in the range of €1.8 to €2.3 billion, based on current foreign exchange rates and jet fuel forward prices. However, we are mindful of uncertainty in the macro environment and fuel and non-fuel cost inflation

•  Committed to generating long-term shareholder value and confident in returning to pre-COVID-19 levels of operating profit within the next few years

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

“2022 was a year of strong recovery, driven by sustained leisure demand and markets reopening. At this point of the year we continue to see robust forward-bookings, while also remaining conscious of global macro-economic uncertainties. We are transforming our businesses, with the intention of returning IAG to pre-COVID levels of profit within the next few years, through major initiatives to improve customer experience and operational performance. Our unique group structure allows us to maximise revenue and cost synergies, and invest capital to achieve strong returns, whilst continuing progress towards net zero by 2050.

“With the acquisition of Air Europa now agreed but subject to regulatory and other approvals which could take around 18 months, we are intending to welcome another leading airline to the Group. This acquisition will enable us to grow Madrid as a hub, offering a gateway to Latin America and beyond, with benefits for customers, employees and shareholders.

“I would like to thank the teams across IAG for their exceptionally hard work in addressing the challenges of ramping up the operation throughout the year.”

•  Significant improvement to our financial performance with operating profit before exceptional items of €1,225 million, an increase of €4,195 million compared to full year 2021

•  Restored 87 per cent of 2019 capacity, measured in available seat kilometres (ASKs), by quarter 4 and 78 per cent in the full year

•  Passenger unit revenue was 11.0% higher than in 2019, with the increase seen particularly in the second half of 2022, with strong leisure traffic recovery and business traffic steadily improving. The premium leisure segment performed very well.

•  Higher non-fuel unit costs, up 24.1% versus 2019, driven by supplier cost inflation net of transformation initiatives, capacity levels still below 2019 and foreign exchange

•  Fuel unit cost was up 30.2% versus 2019, negatively impacted by significant rise in commodity prices for jet fuel, following the Russian invasion of Ukraine in February 2022, partially offset by the benefit of our hedging policy

•  Invested €3.9 billion to make important improvements in fleet, customer offerings, IT infrastructure and sustainability

•  Reduction in net debt to €10.4 billion, driven by operating profit and significant working capital inflows

•  Liquidity continued to strengthen to €14.0 billion at December 31, 2022, from €12.0 billion at the end of 2021

Good progress against strategic objectives in 2022

•  Investing for our customers:

•   Quickly recovered operations in our main hubs in Madrid, Dublin and Barcelona

•   Iberia recognised as the most punctual European airline in 2022. Iberia Express and Vueling also ranked as the third and fourth most punctual airlines in Europe1.

•   Significant focus on rebuilding operational stability at London Heathrow, with British Airways’ operational performance improving through the summer, with 7,400 new colleagues recruited in 2022

•   27 deliveries of modern, fuel-efficient aircraft and 59 longhaul aircraft embodied with next generation products for British Airways and Iberia at the end of 2022

•   Ordered 109 new shorthaul aircraft, bringing fuel efficiency benefits of up to 20 per cent versus the aircraft they will replace

•  Carbon intensity, measured as grammes of CO2 per passenger kilometre, 7 per cent lower than in 2019

•  Agreement with Globalia to acquire the remaining 80 per cent equity of Air Europa, following the acquisition of a 20 per cent equity stake in August 2022. The transaction is subject to regulatory and other approvals which could take around 18 months

•  Funding level of British Airways’ main pension scheme (NAPS) improved such that the scheme was in surplus on its triennial funding basis and no deficit recovery payments were made during 2022 or required in the foreseeable future

Trading outlook

Full year 2023 capacity (ASKs) of approximately 98 per cent of the 2019 level, with quarter 1, 2023 approximately 96 per cent of the quarter 1, 2019 level.

Full year 2023 operating profit before exceptional items expected to be in the range of €1.8 to €2.3 billion, with most of the improvement over 2022 in the first half of the year. Quarter 1, 2023 operating loss of approximately €200 million. This assumes no further setbacks related to COVID-19 or material impacts from geopolitical developments.

Capital expenditure for 2023 of approximately €4.0 billion, subject to the timing of aircraft deliveries. Net debt broadly maintained at the December 31, 2022 level of €10.4 billion by the end of 2023.

This guidance is based on forward jet fuel prices and spot foreign exchange rates at February 23, 2023.

International Airlines Group plans to update the market with further strategic and financial information at a Capital Markets event later in 2023.


1   Cirium report ‘The On-time Performance Review 2022 Airlines & Airports’, January 2023

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