The impact of Omicron, which became apparent on November 25, had a negative short-term impact on the operating result, passenger bookings and cancellations.
International Consolidated Airlines Group (IAG) presented its unaudited Group consolidated results for the year to December 31, 2021.
- Passenger capacity in quarter 4 was 58% of 2019 capacity, up from 43% in quarter 3 and for the full year was 36% of 2019 capacity.
- The easing of government-imposed travel restrictions as the year progressed resulted in improving travel demand, in particular following the opening of the US border to foreign travellers on November 8.
- The impact of Omicron, which became apparent on November 25, had a negative short-term impact on the operating result, passenger bookings and cancellations.
- Significantly improved operating cash flow of 1.0bn euros in the second half of 2021, driven by positive EBITDA in quarter 4, strong forward bookings and favourable working capital.
- Capex in 2021 was 0.7 billion euros, significantly lower than 1.3 billion euros previously guided and 1.7 billion euros expected at the start of the year, due to the delay of Airbus and Boeing aircraft.
- Cash of 7,943 million euros at December 31, 2021, up 2,026 million euros on December 31, 2020. Committed and undrawn general and aircraft facilities were 4,043 million euros, bringing total liquidity to 11,986 million euros, compared to 8,059 million euros at December 31, 2020.
- Proceeds from borrowings of 4.8 billion euros in 2021, including: £2.0 billion UK Export Finance (UKEF) guaranteed 5-year loan for British Airways; 1.2 billion euros unsecured bond issuance by IAG; 825 million euros convertible bond issuance by IAG; $785 million sustainability-linked EETC for British Airways, of which $150 million was drawn in 2021; 75 million euros loan from the Ireland Strategic Investment Fund (ISIF) by Aer Lingus and other aircraft financing.
- In addition, the Group agreed new general facilities, which have not been drawn during 2021, including a $1.755 billion 3-year revolving credit facility available to Aer Lingus, British Airways and Iberia and a £1.0 billion UKEF guaranteed credit facility for British Airways.
- Current passenger capacity plans for 2022 are for around 65% of 2019 capacity in quarter 1 and for around 85% of 2019 capacity for the full year. Omicron has affected bookings in January and February 2022 but has had a minimal impact on bookings for Easter and summer 2022.
- Capex in 2022 is expected to be 3.9 billion euros, reflecting the need to re-build capacity towards pre-pandemic levels, the delay of aircraft deliveries from 2021 and certain pre-delivery payments deferred from previous years. 25 new aircraft are expected to be in delivered in 2022.
IAG results for the period:
- Statutory operating loss for the fourth quarter 278 million euros (2020 restated1: operating loss 1,476 million euros), and operating loss before exceptional items 305 million euros (2020 restated1: operating loss before exceptional items 1,170 million euros).
- Statutory operating loss for the year to December 31, 2021 2,765 million euros (2020 restated1: operating loss 7,451 million euros), and operating loss before exceptional items 2,970 million euros (2020 restated: operating loss before exceptional items 4,390 million euros).
- Loss after tax and exceptional items for the year to December 31, 2021 2,933 million euros (2020 restated1: loss after tax 6,935 million euros) and loss after tax before exceptional items 3,038 million euros (2020 restated1: loss 4,337 million euros).
Luis Gallego, IAG’s Chief Executive Officer, said: “We are confident that a strong recovery is underway. Our teams across the Group are taking every opportunity to develop our business while capitalising on the surge in bookings when travel restrictions are lifted. Our people’s extraordinary work and dedication has been key to weather this crisis. We are also monitoring recent geopolitical events closely to manage any potential impact.
“All our airlines continued to show improvements in the fourth quarter, optimising their performance and further improving their operating results. Our diversified business model enabled us to make the most of the recovery as individual markets were affected at different times and in different ways.
“Iberia made 82 million euros operating profit in the quarter as it seized opportunities to strengthen its position on routes to Latin America and the Spanish domestic market.
“IAG Loyalty continued to be profitable and cash generative, as it has been throughout the pandemic, which shows the benefits of our unique platform.
“Premium leisure has performed strongly at both British Airways and Iberia while business travel has started to recover especially on the transatlantic routes.
“Prior to Omicron, longhaul traffic had seen the highest booking activity in October and November at over 80 per cent of 2019 levels. This was driven by the re-opening of the North Atlantic corridor and the strength of longhaul leisure markets and travellers visiting families and friends.
“Demand slowed down for very near-term trips following the emergence of Omicron in late November. However, bookings have remained strong for Easter and summer 2022 having picked up in the New Year. We expect a robust summer with IAG returning to around 85% of its 2019 capacity for the full year.
“As we ramp up operations our customers remain at the heart of everything we do. This means investment in passenger experience and operational resilience to provide the best service.
“We know that after the worst crisis in aviation’s history we must do things differently. Our model enables us to capture revenue and cost synergies while maximising efficiencies which means we are set up to return to profitability in 2022.
“We’re pleased that our work tackling climate change continues to be recognised as industry-leading. For the second year running, IAG was the only European airline group to receive a Leadership grade (A-) from the Carbon Disclosure Project (CDP). This puts us in the top six per cent among nearly 12,000 global companies. We also received the highest score of any airline from the Transition Pathway Initiative (TPI) which assesses companies’ readiness to transition to a low-carbon economy.”
Trading outlook A significant quarterly operating loss is expected for quarter 1, 2022 due to normal seasonality, the impact of Omicron on near-term bookings and the impact on operating costs of re-building capacity. IAG expects its operating result to be profitable from quarter two, leading both operating profit and net cash flows from operating activities to be significantly positive for the year. This assumes no further setbacks related to COVID-19 and government-imposed travel restrictions or material impact from recent geopolitical developments.
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