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International Consolidated Airlns Grp SA

International Consolidated Airlines Group Reported an operating profit of €655 up 19.1%

International Consolidated Airlines Group (LON:IAG) today presented Group consolidated results for the year to December 31, 2018.

IAG period highlights on results:

• Fourth quarter operating profit €655 million before exceptional items (2017 restated1: €550 million)

• Net foreign exchange operating profit impact for the quarter adverse €9 million

• Passenger unit revenue for the quarter up 1.6 per cent, up 1.5 per cent at constant currency

• Non-fuel unit costs before exceptional items for the quarter up 0.9 per cent, up 0.5 per cent at constant currency

• Fuel unit costs for the quarter up 9.5 per cent, up 9.2 per cent at constant currency

• Operating profit before exceptional items for the year to December 31, 2018 of €3,230 million (2017 restated1: €2,950 million), up 9.5 per cent

• Net foreign exchange impact for the year adverse €129 million

• Passenger unit revenue for the year up 0.1 per cent and up 2.4 per cent at constant currency

• Non-fuel unit costs for the year before exceptional items down 2.2 per cent and down 0.8 per cent at constant currency

• Fuel unit costs for the year up 8.0 per cent, up 12.5 per cent at constant currency

• Cash of €6,274 million at December 31, 2018 was down €402 million on 2017 year end and adjusted net debt to EBITDAR increased 0.1 to 1.6 times

• Profit after tax before exceptional items €2,481 million up 11.2 per cent, and adjusted earnings per share up 15.1 per cent

• Final proposed dividend of 16.5 € cents per share

• Proposed special dividend of 35.0 € cents per share, approximately €700 million

Performance summary:

Year to December 31

Highlights € million

2018

2017
(restated)1

Higher / (lower)

Passenger revenue

21,549

20,285

6.2 %

Total revenue

24,406

22,880

6.7 %

Operating profit before exceptional items

3,230

2,950

9.5 %

Exceptional items

448

(288)

nm

Operating profit after exceptional items

3,678

2,662

38.2%

Available seat kilometres (ASK million)

324,808

306,185

6.1 %

Passenger revenue per ASK (€ cents)

6.63

6.63

0.1 %

Non-fuel costs per ASK (€ cents)

4.89

5.00

(2.2)%

Alternative performance measures

2018

2017
(restated)1

Higher / (lower)

Profit after tax before exceptional items (€ million)

2,481

2,231

11.2 %

Adjusted earnings per share (€ cents)

117.7

102.2

15.1 %

Adjusted net debt (€ million)

8,355

7,759

7.7 %

Adjusted net debt to EBITDAR

1.6

1.5

0.1x

Statutory results € million

2018

2017
(restated)1

Higher / (lower)

Profit after tax and exceptional items

2,897

2,009

44.2 %

Basic earnings per share (€ cents)

142.7

95.2

49.8 %

Cash and interest-bearing deposits

6,274

6,676

(6.0)%

Interest-bearing long-term borrowings

7,509

7,331

2.4 %

Definitions included in Alternative performance measures section.

1 Restated for new accounting standards IFRS 15 ‘Revenue from contracts with customers’ and IFRS 9 ‘Financial instruments’; refer to note 33.

Willie Walsh, IAG Chief Executive Officer, said:

“In 2018, we’re reporting an operating profit of €3,230 million before exceptional items, up 9.5 per cent compared to last year. Yet again, we’ve improved our operating profit this year and our adjusted earnings per share grew by 15.1 per cent. This was a very good performance despite three significant challenges: fuel prices increasing 30 per cent, considerable Air Traffic Control disruption and an adverse foreign exchange impact of €129 million.

“At constant currency, passenger unit revenue improved by 2.4 per cent while non-fuel unit costs decreased by 0.8 per cent on capacity growth of 6.1 per cent.

“In quarter 4, we reported an operating profit of €655 million before exceptional items, up 19.1 per cent compared to last year. Our strong revenue performance continued with passenger unit revenue up 1.5 per cent at constant currency.

“In 2018, we completed our second share buyback which was worth €500 million. We are also returning more than €1.3 billion to our shareholders via ordinary dividends of €615 million and a special dividend of approximately €700 million. This is around €260 million higher than in the previous year”.

Trading outlook

At current fuel prices and exchange rates, IAG expects its 2019 operating profit before exceptional items and impacts of IFRS16 to be broadly in line with €3,230m reported in 2018. Both passenger unit revenue and ex-fuel unit cost is expected to improve at constant currency.