3rd Quarter Results

RNS Number : 7194Q
International Cons Airlines Group
09 November 2012
 



NINE MONTHS RESULTS ANNOUNCEMENT

 

International Consolidated Airlines Group (IAG) today (November 9, 2012) presented Group consolidated results for the nine months ended September 30, 2012 and 2011. In addition, IAG presented combined results for the nine months comparative period ended September 30, 2011, including Iberia's first 21 days of January 2011.

 

IAG period highlights:

§  Third quarter operating profit of €270 million, before exceptional items, €301 million excluding bmi (2011: operating profit €363 million, before exceptional items)

§  Passenger unit revenue up 9.1 per cent for the quarter, flat at constant currency

§  Fuel unit costs up 15.4 per cent for the quarter, up 1.6 per cent at constant currency

§  Non fuel unit costs before exceptional items up 8.5 per cent for the quarter, up 1.6 per cent at constant currency

§  IAG made an operating profit in the nine months of €17 million, British Airways an operating profit of €286 million, and Iberia an operating loss of €262 million

§  Passenger revenue in the nine months up 12.7 per cent, passenger unit revenue up 9.1 per cent, on top of volume increases of 3.3 per cent

§  Fuel costs up 23.5 per cent to €4,633 million (2011: €3,751 million before exceptional items)

§  Non fuel costs before exceptional items, up 10.9 per cent. Non fuel unit costs up 7.4 per cent, or 2.6 per cent at constant currency

§  Cash for the nine months down €170 million to €3,565 million, net debt up €360 million to €1,508 million, adjusted gearing up 1pt to 45 per cent

 

Performance summary:

  

Nine months to September 30  


Nine months to September 30

Consolidated  

  

Consolidated

Combined


Financial data € million (unaudited)

 2012

2011(1)

Higher /

 (lower)

 2012

 2011(2)

  

  

(excludes 21 days Iberia pre-merger)

Passenger revenue

11,560 

10,261 

12.7 %

11,560 

10,082 

Total revenue

13,588 

12,263 

10.8 %

13,588 

12,027 

Operating profit before exceptional items

17 

451 

17 

488 

Exceptional items

(8)

(68)

(8)

(68)

Operating profit after exceptional items

383 

420 

(Loss)/profit before tax

(169)

355 

(169)

394 

Profit after tax

338 

365 

Basic (loss)/earnings per share (€ cents)

  

  


(2.9)

18.9 

Operating figures  

2012

2011(1)

Higher /

 (lower)

  

  

  

  

  

Available seat kilometres (ASK million)

165,536  

160,204  

3.3 %

  

  

Revenue passenger kilometres (RPK million)

133,904  

127,425  

5.1 %

  

  

Seat factor (per cent)

80.9  

79.5  

1.4pts

  

  

Passenger yield per RPK (€ cents)

8.63  

8.05  

7.2 %

  

  

Passenger unit revenue per ASK (€ cents)

6.98  

6.40  

9.1 %

  

  

Non-fuel unit costs per ASK (€ cents)

5.40  

5.03  

7.4 %

  

  

€ million (unaudited)

At September 30,

2012

 At December 31, 2011(1)

Higher /

(lower)

  

  

  

  

  

Cash and interest bearing deposits

3,565 

3,735 

(4.6)%

  

  

Net debt

1,508 

1,148 

31.4 %

  

  

Equity

6,036 

5,686 

6.2 %

  

  

Adjusted gearing(3)

45%

44%

1pt

  

  

 

(1)    This financial data is based on the combined results of operations of British Airways Plc ('BA'), Iberia Líneas Aéreas de España S.A. ('Iberia') and IAG the Company for the nine month period ended September 30, 2012. These combined financial statements eliminate cross holdings and related party transactions. Financial ratios are before exceptional items.

(2)    The IAG September 30, 2011 comparative is the consolidated results of BA and IAG the Company for the nine month period ended September 30, 2011 and Iberia from January 22, 2011 to September 30, 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.

 

Willie Walsh, IAG chief executive, said:

IAG chief executive Willie Walsh said: "In this quarter we made an operating profit of €270 million before exceptional items. Total revenue at constant currency was up 3.7 per cent. Fuel costs were up 20.9 per cent and underlying non fuel unit costs down 1.0 per cent.

"The group performance is coming back to the levels seen in 2011 and this is particularly true if you strip out the bmi losses of €31 million in the quarter. However, there remains a strong difference between the performances of British Airways and Iberia. 

"British Airways' sponsorship of the London Olympics received many plaudits and the airline successfully stimulated premium leisure demand by encouraging holidaymakers to trade up to premium cabins. However, as predicted, business demand was reduced leading to a one-off negative impact on underlying unit revenue this quarter.

 

"The full integration of bmi into British Airways was completed last month and has been achieved smoothly and efficiently.

"Iberia continues to cause concern and we are announcing today a restructuring plan to introduce permanent structural change across the airline. Iberia is in a fight for survival and we will transform it to reduce its cost base so it can grow profitably in the future." 

Financial review:

Basis of presentation

The consolidated results include Iberia from the acquisition date January 21, 2011. The combined results for 2011 include Iberia's results from January 1, 2011.

The nine month performance to September 30, 2012 includes bmi's results from April 20, 2012.  bmi represented 1.9 per cent of the capacity growth, 2.2 per cent of the revenue growth and 2.9 per cent of the operating expenses growth.

Exchange rates

Translation of British Airways' operating results from sterling to euro for the nine months to September 30 resulted in a €646 million benefit to revenues and increased operating expenses by €607 million, reflecting a 6.6 per cent weakening of the euro. The Group realised transactional exchange gains of €31 million on revenues and exchange losses of €136 million on operating expenses.

The net adverse impact of translation and transactional exchange rates on the nine month results was €66 million.

Results - 2012 consolidated results compared to 2011 combined results

Revenue for the nine months to September 2012 increased by 10.8 per cent to €13,588 million, 5.3 per cent at constant exchange rates and 3.3 per cent excluding bmi. Passenger revenue was up 12.7 per cent on an increase in capacity of 3.3 per cent; passenger unit revenues improved 9.1 per cent, 3.4 per cent at constant exchange rates.

Cargo revenue was up 0.9 per cent though decreased 3.4 per cent at constant exchange rates on capacity increase of 3.6 per cent.

Operating costs before exceptional items for the nine months were up 14.9 per cent to €13,571 million; at constant currency up 8.6 per cent, reflecting increased capacity and significant fuel price increases.

Fuel costs for the nine months increased 23.5 per cent to €4,633 million, reflecting price increases, decreased hedging benefits, additional volume and emissions trading credits.

Non fuel costs for the nine months increased 10.9 per cent, before exceptional items, and 6.0 per cent at constant exchange rates; non fuel unit costs (€cents/ASK) were up 7.4 per cent and up 2.6 per cent at constant exchange rates. Non fuel unit costs have been adversely impacted by bmi, Avios accounting and industrial action, net of these impacts non fuel unit costs were up 0.4 per cent.

IAG operating profit, before exceptional items, for the nine months was €17 million compared to a profit of €451 million for the nine months of 2011.

Non-operating costs, before exceptional items, for the nine months were €178 million compared to €107 million in 2011.

The loss before tax for the nine months was €169 million, after exceptional items, compared to a profit of €355 million in 2011.

The tax credit for the nine months reflects the deferred tax benefit from the reduction in the UK corporation tax rates and the losses incurred in Spain at a higher tax rate versus the profits earned in the UK at a lower tax rate.

The Group's cash balance of €3,565 million at September 30, 2012 was down €170 million from December 31, 2011. The cash balance at September 30, 2012 comprised €2,485 million held by British Airways, €1,054 million held by Iberia and €26 million held by IAG. 

Trading outlook:

The revenue trend in quarter 3 was restrained somewhat due to the London Olympics, but we are so far observing that underlying unit revenue is returning to its positive trend in quarter 4.

Including the impact of Hurricane Sandy and continued weakness in Iberia, we now expect to make an operating loss for 2012 in the region of €120 million, after bmi trading losses and exceptional items. The expectation does not take into account any impact of the Iberia restructuring plans.

 

 

 

 

 

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; these documents are 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

  


  


  


  

  

  

  

  

  

Nine months to September 30,

2012


Nine months to September 30,

2011

  

  

  


  


  


  

  

 € million (unaudited)

Before exceptional items

Exceptional items

Total (1)


Before exceptional items

 

Exceptional items

Total (1)

Higher / (lower) (1)

  

 Passenger revenue

11,560  


11,560 


10,261  


10,261  

12.7 %

 Cargo revenue

888  


888  


880  


880  

0.9 %

 Other revenue

1,140  


1,140  


1,122  


1,122  

1.6 %

 Total revenue

13,588  


13,588


12,263  


12,263  

10.8 %

 Employee costs

3,158  

34  

3,192  


2,856  


2,856  

10.6 %

 Fuel, oil costs and emissions charges

4,633  


4,633  


3,751  

76  

3,827  

23.5 %

 Handling, catering and other operating costs

1,348  


1,348  


1,159  


1,159  

16.3 %

 Landing fees and en-route charges

974  


974  


899  


899  

8.3 %

 Engineering and other aircraft costs

979  


979  


840  


840  

16.5 %

 Property, IT and other costs

738  

(25)

713  


677  


677  

9.0 %

 Selling costs

640  

5  

645  


567  


567  

12.9 %

 Depreciation, amortisation and impairment

786  


786  


735  


735  

6.9 %

 Aircraft operating lease costs

322  

(6)

316  


298  

(8)

290  

8.1 %

 Currency differences

(7)


(7)


30  


30  

  

 Total expenditure on operations

13,571  

8  

13,579  


11,812  

68  

11,880  

14.9 %

 Operating profit

17  

(8)

9  


451 

(68)

383  

  

 Net non-operating costs

(178)


(178)


(107)

79 

(28)

66 %

 (Loss)/profit before tax from continuing operations

(161)

(8)

(169)


344  

11 

355  

  

 Tax

165  

10  

175  


(17)


(17)

  

 Profit after tax from continuing operations

4  

2  

6  


327  

11 

338  

  

 Loss after tax from discontinued operations

(45)

(45)



  

 (Loss)/profit after tax for the period

4  

(43)

(39)


327  

11  

338  

  

  

  


  


  


  

  

  

  


  


  


  

  

 Operating figures

2012 (1)


  


2011 (1)


  

Higher / (lower) (1)

  

  


  


  


  

  

 Available seat kilometres (ASK million)

165,536  


  


160,204  


  

3.3 %

 Revenue passenger kilometres (RPK million)

133,904  


  


127,425  


5.1 %

 Seat factor (per cent)

80.9  


  


79.5  


  

1.4pts

 Passenger numbers (thousands)

41,491  


  


39,362  


  

5.4 %

 Cargo tonne kilometres (CTK million)

4,521  


  


4,560  


  

(0.9)%

 Passenger yield per RPK

8.63  


  


8.05  


  

7.2 %

 Passenger unit revenue per ASK

6.98  


  


6.40  


  

9.1 %

 Cargo yield per CTK

19.64  


  


19.30  


  

1.8 %

 Total cost per ASK

8.20  


  


7.37  


  

11.3 %

 Fuel cost per ASK

2.80  


  


2.34  


  

19.7 %

 Total cost excluding fuel per ASK

5.40  


  


5.03  


  

7.4 %

 Aircraft in service

383  


  


347  


  

10.4 %

 Average employee number

59,430  


  


56,798  


  

4.6 %

 

(1)    This financial data is based on the combined results of operations of British Airways Plc ('BA'), Iberia Líneas Aéreas de España S.A. ('Iberia') and IAG the Company for the nine month period ended September 30, 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 nine month period ended September 30, 2012 overleaf.



 

 CONSOLIDATED INCOME STATEMENT

  


  


  


  

  

  

  

  

  

Nine months to September 30,

2012


Nine months to September 30,

2011

  

  

  


  


  


  

  

 € million (unaudited)

Before exceptional items

Exceptional items

Total (1)


Before exceptional items

 

Exceptional items

Total (1)

Higher / (lower) (1)

  

 Passenger revenue

11,560  

 

11,560  


10,082  

 

10,082  

14.7 %

 Cargo revenue

888  

 

888  


866  

 

866  

2.5 %

 Other revenue

1,140  

 

1,140  


1,079  

 

1,079  

5.7 %

 Total revenue

13,588  

 

13,588  


12,027  

 

12,027  

13.0 %

 Employee costs

3,158  

34  

3,192  


2,785  

 

2,785  

13.4 %

 Fuel, oil costs and emissions charges

4,633  

 

4,633  


3,682  

76  

3,758  

25.8 %

 Handling, catering and other operating costs

1,348  

 

1,348  


1,136  

 

1,136  

18.7 %

 Landing fees and en-route charges

974  

 

974  


874  

 

874  

11.4 %

 Engineering and other aircraft costs

979  

 

979  


815  

 

815  

20.1 %

 Property, IT and other costs

738  

(25)

713  


662  

 

662  

11.5 %

 Selling costs

640  

5  

645  


551  

 

551  

16.2 %

 Depreciation, amortisation and impairment

786  

 

786  


725  

 

725  

8.4 %

 Aircraft operating lease costs

322  

(6)

316  


281  

(8)

273  

14.6 %

 Currency differences

(7)

 

(7)


28  


28  

  

 Total expenditure on operations

13,571  

8  

13,579  


11,539  

68  

11,607  

17.6 %

 Operating profit

17  

(8)

9  


488  

(68)

420  

  

 Net non-operating costs

(178)


(178)


(105)

79  

(26)

70 %

 (Loss)/profit before tax from continuing operations

(161)

(8)

(169)


383  

11  

394  

  

 Tax

165  

10  

175  


(29)

 

(29)

  

 Profit after tax from continuing operations

4  

2  

6  


354  

11  

365  

  

 Loss after tax from discontinued operations

(45)

(45)



  

 (Loss)/profit after tax for the period

4  

(43)

(39)


354  

11  

365  

  

  

  


  


  


  

  

  


  


  


  

  

 Basic (loss)/earnings per share (€ cents)


(2.9)


  


18.9 

  

 Diluted (loss)/earnings per share (€ cents)


(2.9)


  


17.0 

  

 

(1)    The IAG September 30, 2012 Income statement is the consolidated results of BA, Iberia and IAG the Company for the nine month period ended September 30, 2012. The IAG September 30, 2011 comparative is the consolidated results of BA and IAG the Company for the nine month period ended September 30, 2011 and Iberia from January 22, 2011 to September 30, 2011.



 

 CONSOLIDATED INCOME STATEMENT

  


  


  

  

  

  

  

  

Three months to September 30,

2012


Three months to September 30,

2011

  

  

  


  


  


  

  

 € million (unaudited)

Before exceptional items

Exceptional items

Total  


Before exceptional items

 

Exceptional items

Total  

Higher / (lower)  

  

 Passenger revenue

4,350  


4,350  


3,813  


3,813  

14.1 %

 Cargo revenue

298  

 

298  


288  


288  

3.5 %

 Other revenue

408  

 

408  


389  


389  

4.9 %

 Total revenue

5,056  

 

5,056  


4,490  


4,490  

12.6 %

 Employee costs

1,088  

2  

1,090  


947  


947  

14.9 %

 Fuel, oil costs and emissions charges

1,660  

 

1,660  


1,373  

15  

1,388  

20.9 %

 Handling, catering and other operating costs

497  

 

497  


400  


400  

24.3 %

 Landing fees and en-route charges

346  

 

346  


310  


310  

11.6 %

 Engineering and other aircraft costs

344  

 

344  


287  


287  

19.9 %

 Property, IT and other costs

268  

5  

273  


232  


232  

15.5 %

 Selling costs

217  

2  

219  


208  


208  

4.3 %

 Depreciation, amortisation and impairment

274  

 

274  


244  


244  

12.3 %

 Aircraft operating lease costs

113  

(2)

111  


98  

(3)

95  

15.3 %

 Currency differences

(21)

 

(21)


28  


28  

  

 Total expenditure on operations

4,786  

7  

4,793  


4,127  

12  

4,139  

16.0 %

 Operating profit

270  

(7)

263  


363  

(12)

351  

  

 Net non-operating costs

(42)


(42)


(31)

(4)

(35)

35 %

 Profit before tax from continuing operations

228  

(7)

221  


332  

(16)

316  

  

 Tax

15  

1  

16  


(49)


(49)

  

 Profit after tax from continuing operations

243  

(6)

237  


283  

(16)

267  

  

 Loss after tax from discontinued operations

(35)

(35)



  

 Profit after tax for the period

243  

(41)

202  


283  

(16)

267  

  

  

  


  


  


  

  

  

  


  


  


  

  

 Operating figures

2012 


  


2011 


  

Higher / (lower)  

  

  


  


  


  

  

 Available seat kilometres (ASK million)

58,260  


  


55,661  


  

4.7 %

 Revenue passenger kilometres (RPK million)

49,343  


  


47,022  


  

4.9 %

 Seat factor (per cent)

84.7  


  


84.5  


  

0.2pts

 Passenger numbers (thousands)

15,760  


  


14,553  


  

8.3 %

 Cargo tonne kilometres (CTK million)

1,511  


  


1,494  


  

1.1 %

 Passenger yield per RPK

8.82  


  


8.11  


  

8.8 %

 Passenger unit revenue per ASK

7.47  


  


6.85  


  

9.1 %

 Cargo yield per CTK

19.72  


  


19.28  


  

2.3 %

 Total cost per ASK

8.21  


  


7.41  


  

10.8 %

 Fuel cost per ASK

2.85  


  


2.47  


  

15.4 %

 Total cost excluding fuel per ASK

5.37  


  


4.95  


  

8.5 %

 Average employee number

61,340  


  


57,575  


  

6.5 %

 

 


This information is provided by RNS
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