15.4% increase in operating profit

Growing revenue, operating profit and operating margin for IAG for the third quarter of 2024; The group announced a 350 million euros share buyback

Highlights

• Executing IAG’s strategy has driven very strong financial performance in the quarter:
• Increase in total revenue by 7.9%
• Increase in operating profit by 15.4% to 2,013 million euros
• Increase in operating margin by 1.4 percentage points to 21.6%
• Demand remains strong in all its core markets, supporting a 1.2% increase in passenger unit revenue
• Ongoing focus on improving its customer propositions and operational resilience
• Increased profitability supports significant free cash flow generation, investment and an increasingly strong balance sheet
• IAG announce a 350 million euros share buyback
• They expect strong financial performance to continue for the rest of the year

Luis Gallego, IAG Chief Executive Officer, said: “We achieved a very strong financial performance in Q3 2024, with a 15.4% increase in operating profit compared to the same period last year and improving our margin to 21.6%. This is due to the effectiveness of our strategy and Group-wide transformation. We are also delivering on our commitment to provide sustainable returns for shareholders. Demand remains strong across our airlines and we expect a good final quarter of 2024 financially.”

Financial highlights for the third quarter of 2024

• Total revenue growth of 7.9% mainly due to to higher passenger revenue, with an improvement in Cargo revenue and Maintenance, Repair and Overhaul (MRO) revenue at Iberia
• Passenger revenue per available seat kilometre (‘ASK’) for the third quarter was 1.2% higher than in the third quarter of 2023, despite an exceptionally strong comparative quarter in 2023. For the nine months to 30 September it has increased by 2.2%
• Non-fuel unit costs increased by 2.2%, as the benefits of transformation and capacity growth partially offset wage settlements and supplier inflation
• Fuel unit cost was down by 4.2% compared to the third quarter of 2023, reflecting the lower effective fuel prices net of hedging and the benefit of IAG’s ongoing deliveries of more efficient aircraft
• Operating margin for the third quarter was 21.6%, a 1.4 percentage point increase compared with the third quarter in 2023, with a 5.4 percentage point improvement in the British Airways margin
• Profit after tax of 1,435 million euros for the third quarter, an increase of 17% compared to 1,230 million euros in Q3 2023
• Net debt at 30 September reduced to 6,189 million euros (31 December 2023: 9,245 million euros; 30 September 2023: 8,009 million euros) and net debt to EBITDA before exceptional items reduced to 1.0 times

The North Atlantic region continues to be a major area of strength for IAG. IAG increased its capacity for the North Atlantic region by 3.9% in the quarter and passenger unit revenue increased by 3.5%. Within this, unit revenue at British Airways was particularly strong whilst Aer Lingus saw a negative impact from the pilots’ strike as well as increased competitor capacity to Dublin.

IAG is also investing in the structurally growing Latin America market, in particular through Iberia and LEVEL. Capacity growth in the quarter continues to be elevated, at 10.7%, as Iberia in particular continues to add frequencies into its core cities. Passenger unit revenue decreased by 2.8%, as strong underlying demand mitigated the impact of the capacity growth.

IAG continue to see strong customer demand in its intra-European network, where capacity increased by 5.3% in the quarter and passenger unit revenue increased by 1.4%. All of short-haul airlines saw good demand and revenue performance across Europe in the quarter.

Group’s capacity growth in the Domestic region (Spain and UK) was 4.1% in the third quarter, with good performance in particular from short-haul airlines Vueling and Iberia Express. Passenger unit revenue reduced slightly by 0.4%.

The rest of the world continues to be more challenging, albeit as a smaller part of IAG’s total capacity (c.15%). Whilst IAG has grown capacity by 17.6% in Asia Pacific, this reflects the restoration of pre-COVID-19 network points and frequencies, which IAG’s airlines will continue to review to ensure disciplined capital allocation. Passenger unit revenue decreased by 15.0% in the third quarter. Its Loyalty business has continued to grow both revenue and profit as it increases ways for customers to earn and spend Avios.

Outlook for 2024

• Planned capacity growth for the fourth quarter is around 5% and for the full year it is now around 6%
• Non-fuel cost is expected to be up around 2% for the year, reflecting the lower capacity growth due mainly to the impact of disruption and aircraft availability across the Group
• Taking into consideration the 76% of hedging IAG have in place for the fourth quarter, total fuel cost for the full year is expected to be around 7.7 billion euros, based on jet fuel forward prices at 7 November 2024
• IAG expect capital expenditure in 2024 to be around 3.1 billion euros, with 20 aircraft to be delivered in the year, including four in the fourth quarter
• Leverage to increase modestly by 31 December 2024
• Group expect strong financial performance to continue for the rest of the year