TIDMIAG
RNS Number : 1318D
International Cons Airlines Group
11 May 2012
THREE MONTHS RESULTS ANNOUNCEMENT
International Consolidated Airlines Group (IAG) today (May 11,
2012) presented Group consolidated results for the three months
ended March 31, 2012. In addition, IAG presented combined results
for the three months ended March 31, 2012, including Iberia's first
21 days of January in the comparative period.
IAG period highlights on combined results:
-- First quarter operating loss of EUR249 million, before
exceptional items (2011: EUR102 million loss)
-- Loss before tax for the quarter of EUR263 million (2011: EUR47 million loss)
-- Revenue for the quarter up 7.8 per cent to EUR3,919 million
(2011: EUR3,636 million), including EUR40 million or 1.1 per cent
of favourable currency impact
-- Passenger unit revenue for the quarter up 8.5 per cent (7.3
per cent at constant currency), on top of capacity increases of 0.6
per cent
-- Fuel costs for the quarter up 24.9 per cent to EUR1,409
million (2011: EUR1,128 million), fuel unit costs were up 24.0 per
cent
-- Non-fuel costs before exceptional items for the quarter up
5.7 per cent at EUR2,759 million, including EUR32 million or 1.2
per cent of adverse currency impact. Non-fuel unit costs up 5.1 per
cent, or 3.7 per cent at constant currency
-- Cash of EUR3,574 million at quarter end was down EUR161 million
-- Group net debt down EUR19 million in the quarter to EUR1,129 million
Performance summary:
Combined Consolidated
Three months to March Three months to March
31 31
------------------------- -------------------------------
Financial data EUR million 2012(1) 2011(1) Higher / 2012(2) 2011(2)
(unaudited) (lower)
(excludes
21 days
Iberia pre-merger)
Passenger revenue 3,290 3,018 9.0 % 3,290 2,839
Total revenue 3,919 3,636 7.8 % 3,919 3,399
----------------------------------- ---------- ------------- --------- --------- --------------------
Operating loss before exceptional
items (249) (102) 144 % (249) (65)
Exceptional items 37 - nm 37 -
----------------------------------- ---------- ------------- --------- --------- --------------------
Operating loss after exceptional
items (212) (102) 108 % (212) (65)
Loss before tax (263) (47) 460 % (263) (8)
(Loss)/profit after tax (146) 33 (542)% (146) 60
----------------------------------- ---------- ------------- --------- --------- --------------------
Basic earnings per share
(EUR cents) (8.2) 3.3
--------- --------------------
Operating figures 2012(1) 2011(1) Higher /
(lower)
Available seat kilometres
(ASK million) 51,425 51,116 0.6 %
Revenue passenger kilometres
(RPK million) 39,140 37,767 3.6 %
Seat factor (per cent) 76.1 73.9 2.2pts
----------------------------------- ---------- ------------- ---------
Passenger yield per RPK
(EUR cents) 8.41 7.99 5.3 %
Passenger unit revenue per
ASK (EUR cents) 6.40 5.90 8.5 %
Non-fuel unit costs per
ASK (EUR cents) 5.37 5.11 5.1 %
----------------------------------- ---------- ------------- ---------
EUR million (unaudited) At March At December Higher /
31, 31, 2011(1)
2012(2) (lower)
Cash and interest bearing
deposits 3,574 3,735 (4.3)%
Net debt 1,129 1,148 (1.7)%
Equity 5,739 5,686 0.9 %
Adjusted gearing(3) 43% 44% (1pt)
----------------------------------- ---------- ------------- ---------
(1) This financial data is based on the combined results of
operations of British Airways Plc ('BA'), Iberia Lineas Aereas de
Espana S.A. ('Iberia') and IAG the Company for the three month
period ended March 31, 2012 and 2011. These combined financial
statements eliminate cross holdings and related party transactions.
Financial ratios are before exceptional items.
(2) The IAG March 31, 2012 Income statement is the consolidated
results of BA, Iberia and IAG the Company for the three month
period ended March 31, 2012. The IAG March 31, 2011 comparative is
the consolidated results of BA and IAG the Company for the three
month period ended March 31, 2011 and Iberia from January 22, 2011
to March 31, 2011.
(3) Adjusted gearing is net debt plus capitalised operating
aircraft lease costs, divided by net debt plus capitalised
operating aircraft lease costs and equity.
nm = not meaningful
Willie Walsh, IAG chief executive, said:
"Total revenue in the quarter was up 7.8 per cent with passenger
unit revenue up 8.5 per cent based on a capacity increase of 0.6
per cent. Despite this, we've made an operating loss of EUR249
million before exceptional items. This is mainly due to a EUR281
million, 24.9 per cent rise in fuel costs, driven by higher prices,
the reduced impact of hedging and emissions charges. The Iberia
pilots' strike cost EUR25 million this quarter.
"Iberia's overall operating loss for the quarter was EUR170
million (2011: EUR100 million operating loss) and British Airways'
operating loss was GBP62 million before exceptional items (2011:
GBP5 million operating loss). Iberia's performance reflects the
weakness of the Spanish domestic market and industrial action by
pilots opposed to actions by Iberia's management to improve the
airline's efficiencies. For British Airways, although the London
market and demand for transatlantic travel remains strong, its
performance has been affected by rising fuel costs.
"The financial performance of our business continues to be
undermined by government actions. In addition to the UK government
increasing the world's highest aviation tax - Air Passenger Duty -
by double the inflation rate, the Spanish government plans to
increase departure taxes from Spain by up to 10 euros per
passenger.
"In late April, we completed our purchase of bmi. As a result,
British Airways is able to manage its wider Heathrow slot portfolio
more effectively and is launching a new route to Seoul later this
year. Airports across the UK and beyond have contacted us about
starting services and, subject to reaching satisfactory agreement
with them, we plan to also launch flights from Heathrow to
Leeds-Bradford, Rotterdam and Zagreb and increase frequencies to
existing key destinations. Consultation continues with bmi
mainlinestaff and their trade unions about plans to integrate the
business into British Airways.
"bmi regional has been sold to Sector Aviation Holdings Ltd.
"bmibaby is not part of our plans and consultation has started
with trade unions on proposals to review future options for the
business".
Financial review:
Revenue for the quarter rose by 7.8 per cent to EUR3,919 million
(2011: EUR3,636 million). Passenger revenue was up 9.0 per cent on
capacity growth (ASKs) of 0.6 per cent and improved unit passenger
revenues (EURcents per ASK) of 8.5 per cent. At constant exchange
rates total revenue was up 6.7 per cent or EUR243 million with
passenger revenue up 7.9 per cent and unit passenger revenues up
7.3 per cent.
Cargo revenue for the quarter was up 0.3 per cent with yield up
2.6 per cent and volume down 2.2 per cent.
Operating costs before exceptional items for the quarter were up
11.5 per cent to EUR4,168 million (2011: EUR3,738 million), with
fuel costs being 7.5 per cent of this increase. Currency had a 1.5
per cent adverse impact on top of increased capacity of 0.6 per
cent. Fuel costs are up 24.9 per cent or EUR281 million, reflecting
price increases and additional volume. Emissions trading charges of
EUR15 million were incurred for the first time this quarter and are
included within fuel costs.
Non-fuel costs before exceptional items are up 5.7 per cent;
non-fuel unit costs (EUR/ASK) are up 5.1 per cent (3.7 per cent at
constant exchange rates). The strike has impacted non-fuel unit
costs by 1.3 per cent at constant currency. The non-fuel unit costs
were impacted by 1.1 per cent due to the timing of the recognition
of bonuses quarter over quarter and the accounting treatment of
taxes, fees and charges as part of the new Avios proposition.
In April, British Airways settled a fine with the Office of Fair
Trading in the UK relating to investigations into passenger fuel
surcharging dating back to 2004 - 2006. The fine agreed was EUR70
million (GBP58.5 million), resulting in a EUR35 million release of
the provision held. This benefit was recognised in the first
quarter as an exceptional item.
Non-operating costs were EUR51 million for the quarter compared
to income of EUR55 million in 2011. The prior year credit was
primarily due to the EUR83 million gain on the step acquisition of
Iberia. In addition, the net financing expense relating to pensions
was a EUR5 million credit in the prior year but a EUR21 million
expense in the current year.
The loss before tax for the quarter was EUR263 million (2011:
EUR47 million loss).
The tax credit for the quarter of EUR117 million reflects an
effective rate of 29 per cent, excluding the reduction in deferred
tax liabilities related to the impact of substantively enacted
lower tax rates in the UK.
The Group's cash position remains strong with cash and cash
equivalents and other interest-bearing deposits at EUR3,574
million. The net debt of the Group has fallen by EUR19 million to
EUR1,129 million compared to December 31, 2011. Adjusted gearing at
March 31, 2012 improved by 1 point to 43 per cent.
Trading outlook:
The outlook for 2012 is subject to a number of
uncertainties:
-- Demand in London remains strong, with a continuation of the
encouraging trends we saw in H2 2011 in our longhaul premium
cabins, particularly on North Atlantic routes.
-- The Spanish and wider Eurozone macro-economic background
deteriorated in Q1, and this is reflected in a worsening commercial
performance from our Madrid hub.
-- At the current oil price and euro/US dollar exchange rates,
we would face a fuel cost increase this year of over EUR1 billion;
the year-over-year impact of this should be less severe in H2.
-- We remain focused on maximising profits through efficiency
improvements, and the recent launch of Iberia Express is a major
step in that direction. Pilots' strike action associated with our
pursuit of this strategy, which continued during the second
quarter, has now been called off, but the speed of revenue recovery
post-strike and the performance of the Spanish markets are unclear
at this stage.
-- The year one operating profit dilution from the acquisition
and integration of bmi, completed during Q2, is expected to be in
the order of EUR240 million. This includes non-recurring
restructuring costs to be booked this year of approximately EUR90
million.
The above factors mean that IAG expects its operating result to
be around the breakeven level for the full year, after exceptional
items, including the non-recurring bmi restructuring cost.
Forward-looking statements:
Certain information included in these statements is
forward-looking and involves risks and uncertainties that could
cause actual results to differ materially from those expressed or
implied by the forward-looking statements.
Forward-looking statements include, without limitation,
projections relating to results of operations and financial
conditions and International Consolidated Airlines Group S.A. (the
'Group') plans and objectives for future operations, including,
without limitation, discussions of the Company's Business Plan,
expected future revenues, financing plans and expected expenditures
and divestments. All forward-looking statements in this report are
based upon information known to the Company on the date of this
report. The Company undertakes no obligation to publicly update or
revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
It is not reasonably possible to itemise all of the many factors
and specific events that could cause the Company's forward-looking
statements to be incorrect or that could otherwise have a material
adverse effect on the future operations or results of an airline
operating in the global economy. Further information on the primary
risks of the business and the risk management process of the Group
is given in the Annual Report and Accounts 2011; this document is
available on www.iagshares.com.
IAG Investor Relations
2 World Business Centre Heathrow
Newall Road, London Heathrow Airport
HOUNSLOW TW6 2SF
Tel: +44 (0)208 564 2900
Investor.relations@iairgroup.com
COMBINED INCOME
STATEMENT
Three months to March Three months to March
31, 31,
2012 2011
-------------------------------------- --------------------------------------
EUR million Before Exceptional Total(1) Before Exceptional Total(1) Higher
(unaudited) exceptional items exceptional items / (lower)(1)
items items
Passenger revenue 3,290 3,290 3,018 3,018 9.0 %
Cargo revenue 291 291 290 290 0.3 %
Other revenue 338 338 328 328 3.0 %
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
Total revenue 3,919 3,919 3,636 3,636 7.8 %
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
Employee costs 994 994 924 924 7.6 %
Fuel, oil costs
and emissions 24.9
charges 1,409 1,409 1,128 1,128 %
Handling,
catering and
other operating
costs 395 395 383 383 3.1 %
Landing fees and
en-route
charges 287 287 288 288 (0.3)%
Engineering and
other
aircraft costs 301 301 278 278 8.3 %
Property, IT and
other
costs 235 (35) 200 215 215 9.3 %
13.4
Selling costs 203 203 179 179 %
Depreciation,
amortisation
and impairment 252 252 246 246 2.4 %
Aircraft
operating lease
costs 99 (2) 97 104 104 (4.8)%
Currency
differences (7) (7) (7) (7) -
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
Total expenditure 11.5
on operations 4,168 (37) 4,131 3,738 3,738 %
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
Operating loss (249) 37 (212) (102) (102) 144 %
Net non-operating 82.1
(costs)/income (51) (51) (28) 83 55 %
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
Loss before tax (300) 37 (263) (130) 83 (47) 131 %
46.3
Tax 117 117 80 80 %
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
(Loss)/profit
after tax (183) 37 (146) (50) 83 33 266 %
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
Operating figures 2012(1) 2011(1) Higher
/ (lower)(1)
Available seat
kilometres
(ASK million) 51,425 51,116 0.6 %
Revenue passenger
kilometres
(RPK million) 39,140 37,767 3.6 %
Seat factor (per
cent) 76.1 73.9 2.2pts
Passenger numbers
(thousands) 11,384 11,528 (1.2)%
Cargo tonne
kilometres
(CTK million) 1,481 1,514 (2.2)%
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
Passenger yield
per RPK 8.41 7.99 5.3 %
Passenger unit
revenue
per ASK 6.40 5.90 8.5 %
Cargo yield per
CTK 19.65 19.15 2.6 %
Total cost per 10.9
ASK 8.11 7.31 %
24.0
Fuel cost per ASK 2.74 2.21 %
Total cost
excluding fuel
per ASK 5.37 5.11 5.1 %
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
Aircraft in
service 349 346 0.9 %
Average employee
number 56,532 56,159 0.7 %
(1) This financial data is based on the combined results of
operations of British Airways Plc ('BA'), Iberia Lineas Aereas de
Espana S.A. ('Iberia') and IAG the Company for the three month
period ended March 31, 2012 and 2011. These combined financial
statements eliminate cross holdings and related party transactions.
Financial ratios are before exceptional items.
See consolidated results for the three month period ended March
31, 2012 overleaf.
CONSOLIDATED
INCOME STATEMENT
Three months to March Three months to March
31, 31,
2012 2011
-------------------------------------- --------------------------------------
EUR million Before Exceptional Total(1) Before Exceptional Total(1) Higher
(unaudited) exceptional items exceptional items / (lower)(1)
items items
15.9
Passenger revenue 3,290 3,290 2,839 2,839 %
Cargo revenue 291 291 276 276 5.4 %
19.0
Other revenue 338 338 284 284 %
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
15.3
Total revenue 3,919 3,919 3,399 3,399 %
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
16.5
Employee costs 994 994 853 853 %
Fuel, oil costs
and emissions 33.1
charges 1,409 1,409 1,059 1,059 %
Handling,
catering and
other operating
costs 395 395 361 361 9.4 %
Landing fees and
en-route
charges 287 287 263 263 9.1 %
Engineering and
other 19.4
aircraft costs 301 301 252 252 %
Property, IT and
other 18.7
costs 235 (35) 200 198 198 %
24.5
Selling costs 203 203 163 163 %
Depreciation,
amortisation
and impairment 252 252 236 236 6.8 %
Aircraft
operating lease 13.8
costs 99 (2) 97 87 87 %
Currency
differences (7) (7) (8) (8) (12.5)%
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
Total expenditure 20.3
on operations 4,168 (37) 4,131 3,464 3,464 %
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
Operating loss (249) 37 (212) (65) (65) 283 %
Net non-operating 96.2
(costs)/income (51) (51) (26) 83 57 %
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
Loss before tax (300) 37 (263) (91) 83 (8) 230 %
72.1
Tax 117 117 68 68 %
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
(Loss)/profit
after tax (183) 37 (146) (23) 83 60 696 %
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
Basic earnings
per share
(EUR cents) (8.2) 3.3
Diluted earnings
per share
(EUR cents) (8.2) 2.9
------------------ ------------- ------------ --------- ------------- ------------ --------- --------------
(1) The IAG March 31, 2012 Income statement is the consolidated
results of BA, Iberia and IAG the Company for the three month
period ended March 31, 2012. The IAG March 31, 2011 comparative is
the consolidated results of BA and IAG the Company for the three
month period ended March 31, 2011 and Iberia from January 22, 2011
to March 31, 2011. Financial ratios are before exceptional
items.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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