Half Yearly Report

RNS Number : 6463U

International Cons Airlines Group

31 July 2015

 



SIX MONTHS RESULTS ANNOUNCEMENT

International Consolidated Airlines Group (IAG) today (July 31, 2015) presented Group consolidated results for the six months to June 30, 2015.

IAG period highlights on results:

·      Second quarter operating profit €530 million (2014: operating profit of €380 million)

·      Revenue for the quarter up 11.2 per cent to €5,656 million

·      Passenger unit revenue for the quarter up 5.0 per cent and down 6.6 per cent at constant currency

·      Fuel unit costs for the quarter up 3.0 per cent, down 12.0 per cent at constant currency

·      Non-fuel unit costs for the quarter up 3.2 per cent, down 6.9 per cent at constant currency

·      Operating profit for the half year €555 million (2014: operating profit €230 million), up 141 per cent

·      Cash of €6,421 million at June 30, 2015 was up €1,477 million on 2014 year end

·      Adjusted gearing down 8 points to 43 per cent and adjusted net debt to EBITDAR improved 0.4 to 1.5 times

Performance summary:

	Six months to June 30
Financial data € million	2015	2014	Higher / (lower)
Passenger revenue	9,119	8,177	11.5 %
Total revenue	10,363	9,289	11.6 %
Operating profit	555	230	141.3 %
Profit after tax	332	96	245.8 %
Basic earnings per share (€ cents)	15.8	4.2	11.6pts
Operating figures	2015	2014	Higher / (lower)
Available seat kilometres (ASK million)	127,243	120,892	5.3 %
Seat factor (per cent)	79.3	78.9	0.4pts
Passenger unit revenue per ASK (€ cents)	7.17	6.76	6.1 %
Non-fuel unit costs per ASK (€ cents)	5.32	5.10	4.3 %
€ million	June 30,	December 31,	Higher / (lower)
	2015	2014
Cash and interest-bearing deposits	6,421	4,944	29.9 %
Adjusted net debt(1)	5,463	6,081	(10.2)%
Adjusted net debt to EBITDAR	1.5	1.9	(0.4pts)
Adjusted gearing(2)	43%	51%	(8pts)

⁽¹⁾        Adjusted net debt is net debt plus capitalised rolling four quarter aircraft operating lease costs.

⁽²⁾        Adjusted gearing is adjusted net debt, divided by adjusted net debt and adjusted equity.

Willie Walsh, IAG Chief Executive Officer, said:

"We made an operating profit of €530 million in the quarter, up from a €380 million operating profit last year. 

"At constant currency, revenue was down 1.2 per cent with passenger unit revenue down 6.6 per cent.  Non-fuel unit costs were down 6.9 per cent while fuel unit costs were down 12 per cent.

"We said previously that profit improvement would be slower in the second quarter and we are on track to reach our full year targets.

"We continue to take cost out of the business, with both employee and supplier unit costs down at constant currency, and improvements in productivity levels.

"In the half year, we made an operating profit of €555 million which is up from a €230 million operating profit last year".

 Trading outlook

At current fuel prices and exchange rates our outlook remains unchanged. IAG expects in 2015 to generate an operating profit in excess of €2.2 billion.

Forward-looking statements:

Certain statements included in this report are forward-looking and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

Forward-looking statements can typically be identified by the use of forward-looking terminology, such as "expects", "may", "will", "could", "should", "intends", "plans", "predicts", "envisages" or "anticipates" and include, without limitation, any projections relating to results of operations and financial conditions of International Consolidated Airlines Group S.A. and its subsidiary undertakings from time to time (the 'Group'), as well as plans and objectives for future operations, expected future revenues, financing plans, expected expenditures and divestments relating to the Group and discussions of the Group's Business plan. All forward-looking statements in this report are based upon information known to the Group on the date of this report. The Group 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 forward-looking statements in this report 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 2014; 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: [phone]

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CONSOLIDATED INCOME STATEMENT
	Six months to June 30
€ million			Higher/ (lower)
	2015	2014
Passenger revenue	9,119	8,177	11.5 %
Cargo revenue	505	488	3.5 %
Other revenue	739	624	18.4 %
Total revenue	10,363	9,289	11.6 %
Employee costs	2,328	2,096	11.1 %
Fuel, oil costs and emissions charges	3,033	2,898	4.7 %
Handling, catering and other operating costs	1,061	982	8.0 %
Landing fees and en-route charges	827	734	12.7 %
Engineering and other aircraft costs	700	606	15.5 %
Property, IT and other costs	466	486	(4.1)%
Selling costs	459	437	5.0 %
Depreciation, amortisation and impairment	620	571	8.6 %
Aircraft operating lease costs	305	260	17.3 %
Currency differences	9	(11)	(181.8)%
Total expenditure on operations	9,808	9,059	8.3 %
Operating profit	555	230	141.3 %
Net non-operating costs	(143)	(75)	90.7%
Profit before tax	412	155	165.8 %
Tax	(80)	(59)	35.6 %
Profit after tax for the period	332	96	245.8 %
Operating figures	2015	2014	Higher/ (lower)
Available seat kilometres (ASK million)	127,243	120,892	5.3 %
Revenue passenger kilometres (RPK million)	100,875	95,331	5.8 %
Seat factor (per cent)	79.3	78.9	0.4pts
Cargo tonne kilometres (CTK million)	2,607	2,692	(3.2)%
Passenger numbers (thousands)	38,638	35,480	8.9 %
Tonnes of cargo carried (thousands)	432	441	(2.0)%
Sectors	300,947	283,517	6.1 %
Block hours (hours)	860,439	819,466	5.0 %
Average manpower equivalent	58,958	59,140	(0.3)%
Aircraft in service	472	459	2.8 %
Passenger revenue per RPK (€ cents)	9.04	8.58	5.4 %
Passenger unit revenue per ASK (€ cents)	7.17	6.76	6.1 %
Cargo revenue per CTK (€ cents)	19.37	18.13	6.8 %
Fuel cost per ASK (€ cents)	2.38	2.40	(0.8)%
Non-fuel unit costs per ASK (€ cents)	5.32	5.10	4.3 %
Total cost per ASK (€ cents)	7.71	7.49	2.9 %
No exceptional items in the six months to June 30, 2015 and 2014.

CONSOLIDATED INCOME STATEMENT
	Three months to June 30
€ million			Higher/ (lower)
	2015	2014
Passenger revenue	5,003	4,513	10.9 %
Cargo revenue	259	238	8.8 %
Other revenue	394	335	17.6 %
Total revenue	5,656	5,086	11.2 %
Employee costs	1,204	1,078	11.7 %
Fuel, oil costs and emissions charges	1,644	1,510	8.9 %
Handling, catering and other operating costs	550	530	3.8 %
Landing fees and en-route charges	465	399	16.5 %
Engineering and other aircraft costs	366	299	22.4 %
Property, IT and other costs	227	255	(11.0)%
Selling costs	232	224	3.6 %
Depreciation, amortisation and impairment	314	293	7.2 %
Aircraft operating lease costs	161	134	20.1 %
Currency differences	(37)	(16)	131.3%
Total expenditure on operations	5,126	4,706	8.9 %
Operating profit	530	380	39.5 %
Net non-operating costs	(81)	(22)	268.2%
Profit before tax	449	358	25.4 %
Tax	(91)	(78)	16.7 %
Profit after tax for the period	358	280	27.9 %
Operating figures	2015	2014	Higher/ (lower)
Available seat kilometres (ASK million)	68,138	64,576	5.5 %
Revenue passenger kilometres (RPK million)	54,977	52,111	5.5 %
Seat factor (per cent)	80.7	80.7	0pt
Cargo tonne kilometres (CTK million)	1,293	1,321	(2.1)%
Passenger numbers (thousands)	21,960	20,196	8.7 %
Tonnes of cargo carried (thousands)	214	217	(1.4)%
Sectors	165,779	156,045	6.2 %
Block hours (hours)	468,935	443,369	5.8 %
Average manpower equivalent	59,859	59,893	(0.1)%
Passenger revenue per RPK (€ cents)	9.10	8.66	5.1 %
Passenger unit revenue per ASK (€ cents)	7.34	6.99	5.0 %
Cargo revenue per CTK (€ cents)	20.03	18.02	11.2 %
Fuel cost per ASK (€ cents)	2.41	2.34	3.0 %
Non-fuel unit costs per ASK (€ cents)	5.11	4.95	3.2 %
Total cost per ASK (€ cents)	7.52	7.29	3.2 %

Quarter 2 operating profit overview:

IAG's operating profit for the quarter to June 30, 2015 was €530 million, an improvement of €150 million from the same quarter in the prior year. British Airways made a profit of €453 million (2014: operating profit €332 million); Iberia made a profit of €51 million (2014: operating profit €16 million) and Vueling's profit was €24 million (2014: operating profit €30 million) on top of a 13.9 per cent capacity increase.

Half year financial review:

Strategic development

On May 26, 2015 IAG and the independent directors of Aer Lingus Group plc ('Aer Lingus') reached agreement on the terms of a recommended cash offer for the entire issued ordinary share capital of Aer Lingus to be made by AERL Holding Limited, a wholly incorporated subsidiary of IAG. The offer is for €2.55 per Aer Lingus share, comprising a cash payment of €2.50 per Aer Lingus share and the payment of a cash dividend of €0.05 per Aer Lingus share (paid by Aer Lingus on May 29, 2015 to Aer Lingus shareholders on the register of members on May 1, 2015). The transaction values Aer Lingus' entire issued ordinary share capital at approximately €1.4 billion.  The offer, extended to August 18, 2015, is subject to the terms and conditions that have not already been satisfied which are set out in Appendix I of the Offer document (www.iairgroup.com), in particular acceptance of the Offer having been received in respect of the Aer Lingus shares held by the Ryanair Group.

Operating and market environment

The half year has seen decreasing fuel prices although partially offset by adverse exchange. The improvement in the pound sterling against the euro has generated translation benefits for the Group which again have been partially offset by the US dollar strength.

Revenues in our domestic, LATAM and Asia Pacific markets were up 3 to 4 per cent at constant currency ('ccy') on capacity growth of about 8 per cent.  The LATAM market has been impacted by weakness in Brazil and Venezuela.  Revenues in our European markets rose 8 per cent at ccy while capacity for the Group was increased by 13 per cent partially through seat densification but also reflecting additional capacity in our low cost carriers, Iberia Express and Vueling.  Capacity in the Africa, Middle East and South Asia region was reduced 4 per cent but revenues fell further impacted by weakening of oil routes. North Atlantic passenger unit revenues were broadly flat for the six months, down 1 per cent.

Capacity

IAG increased capacity (ASKs) by 5.3 per cent in the first six months of the year and traffic volumes rose 5.8 per cent, increasing seat factor to 79.3 per cent. The rise in capacity reflects growth at Vueling, restoration of routes at Iberia and seat densification in British Airways' shorthaul.

Revenue

Passenger revenue increased 11.5 per cent compared to the prior year six months with approximately 10.4 points of beneficial currency impact. Passenger unit revenue (passenger revenue per ASK) was down 3.8 per cent at constant currency ('ccy') from lower yields. Yields have been impacted at Vueling and Iberia by growth. British Airways yields are down related to weakening oil routes and increased competitor capacity on transatlantic routes in addition to the impacts of currency dislocation. Overall the Group has maintained its volumes in the first half of 2015 with seat factor rising 0.4 points.

Cargo revenue for the period decreased by 8.0 per cent at ccy reflecting the reduction in the Cargo freighter programme. The performance of the Cargo business was up with load factors flat, positive mix partially offsetting market price pressure, and benefits from strong cost management. 

Other revenue was up 6.3 per cent at ccy. The increase includes a €50 million benefit from the timing of the recognition of Avios revenue. The underlying revenue rose through higher customer engagement at BA Holidays and in the Avios loyalty scheme, partially offset by lower third party maintenance activity in the period.

Costs

Employee unit costs improved 3.5 per cent at ccy. The average number of employees reduced by 0.3 per cent and productivity rose by 5.6 per cent with improvements at each airline.

Fuel costs decreased 6.8 per cent at ccy, driven by lower average fuel prices net of hedging. At constant currency and on a unit basis the improvement was 11.7 per cent, with benefits from more efficient aircraft and improved operational procedures.

Handling, catering and other operating costs decreased 1.8 per cent at ccy benefiting from an improvement in operations reducing costs related to disruption, including compensation fees and baggage costs. The improvements have been partially offset by higher costs due to additional passengers carried, inflationary price increases and BA Holiday activity.

Landing fees and en-route charges rose 6.4 per cent excluding adverse currency impacts. The performance reflects increased airport charges and additional volume, with ASKs up 5.3 per cent and sectors flown up 6.1 per cent.

Engineering and other aircraft costs were broadly flat at ccy. Increases are driven by volume and price, offset by the reduced freighter flying of IAG Cargo and less third party maintenance activity.

Property, IT and other costs decreased, half of which is due to cost improvements including IT initiatives and the remaining reduction from one-time benefits.

Selling costs decreased 3.9 per cent excluding adverse currency impacts due to the timing of promotions and from improvements in supplier contract terms. The reduction in selling costs was partially offset by volume increases related to additional passengers carried during the period.

Ownership costs increased 1.6 per cent at ccy. At June 30, 2015 the Group had 472 aircraft, an increase of 13 from June 30, 2014.  The increase in aircraft primarily related to 22 additional Airbus A320s, while the Boeing 737-400s are being retired. 

At constant currency non-fuel unit costs decreased by 4.9 per cent with benefits from exiting the Cargo freighter programme and the seat densification at British Airways. Non-fuel unit costs improved at British Airways and Iberia, while Vueling was broadly flat.

Operating profit overview

IAG's operating profit for the six months to June 30, 2015 was €555 million, an improvement of €325 million from the prior year. British Airways made a profit of €570 million (2014: €327 million); Iberia made a loss of €4 million (2014: €95 million) and Vueling's loss was €5 million (2014: €0 million).

Exceptional items

There have been no exceptional items in the six months to June 30, 2015 or 2014.

Non-operating items

The net non-operating cost was €143 million for the six months compared to €75 million for the same period last year. The increase related to 'Net currency retranslation charges' from the weakening of the euro against the US dollar and additional finance costs primarily from adverse translation currency with the weakening of the euro against the pound sterling. 

Taxation

The tax charge for the six months to June 30, 2015 is €80 million (2014: €59 million charge) with an effective tax rate of 19 per cent.

Profit after tax

The profit after tax for the six month period to June 30, 2015 was €332 million (2014: €96 million).

Exchange rates

For the six months to June 30, 2015, the reported results are impacted by translation currency from converting British Airways' results from sterling to the Group's reporting currency of euro. The net impact on the operating profit was €73 million favourable, with an increase in revenue of €814 million and an increase in cost of €741 million, reflecting a 10.3 per cent weakening of the euro versus the pound sterling.

The transactional exchange rate impact across the Group was €167 million favourable on revenues and €194 million adverse on costs with a net adverse impact of €27 million.

The net benefit on operating profit from currency was €46 million for the six months to June 30, 2015.

Cash

The Group's cash position was €6,421 million up €1,477 million from December 31, 2014. British Airways' cash position was €3,730 million, Iberia €1,118 million, Vueling €829 million and the parent and other Group companies €744 million. 

Compared to December 31, 2014, the Group's adjusted net debt decreased by €618 million to €5,463 million and adjusted net debt to EBITDAR improved 0.4 points.  Adjusted gearing improved by eight points.

Principal risks and uncertainties

During the period we have continued to maintain and operate our structure and processes to identify, assess and manage risks. The principal risks and uncertainties affecting us, detailed on pages 87 to 93 of the December 31, 2014 Annual Report and Accounts, remain relevant for the remaining six months of the year.

Other strategic developments

On January 26, 2015, Iberia announced plans to begin flights to Cali and Medellin in Colombia in early July. Iberia highlighted that this has been possible due to its restructuring which has allowed it to achieve a competitive cost base.

Iberia and its subsidiary Iberia Express were the world's most punctual airlines in January according to the latest ranking published by FlightStats. Iberia led network carriers with 92.72 per cent of flights on time while Iberia Express achieved 96.34 per cent punctuality the highest score among low cost carriers. The airline's improvement in operational performance has been a key aspect of its restructuring.

British Airways is changing its 'On Business' loyalty scheme for small and medium sized businesses to incorporate American Airlines and Iberia. The new partnership will allow On Business members to benefit from collecting and spending across all three airlines under one programme.

Vueling has become the first airline to offer a self-service baggage check-in at its hub in Barcelona, also as part of a marketing agreement, Vueling has begun to install power outlets in the priority seats of its fleet.

On March 4, 2015, Iberia announced that it had reached an agreement with Airbus to take early delivery of eight Airbus A330-200s that IAG ordered for the airline last year to replace Airbus A340-300s. The new aircraft will join Iberia's longhaul fleet up to 14 months earlier than initially planned, between November 2015 and December 2016.

On March 19, 2015, Vueling signed an agreement with American Airlines to feed its longhaul flights from the US at Barcelona-El Prat and Rome-Fiumicino airports.

On March 29, 2015, British Airways began its Airbus A380 services to San Francisco from London Heathrow adding 6,000 more seats a month between the two cities.

In April 2015, IAG took delivery of its first five Airbus A320s standardised aircraft which have joined Vueling's fleet. The aircraft are part of IAG's harmonisation plan which aims at reducing costs by standardising its Airbus A320 fleet across the Group.

On May 13, 2015, Iberia announced that it won 17 out of 21 tendered licenses to provide handling services at Spanish airports. The airline remains the main handling operator in Spain and highlighted that this outcome has been achieved due to the cost and productivity agreements reached with its employees.

On May 27, 2015, British Airways started daily flights to Kuala Lumpur on a four class Boeing 777-200ER aircraft. The airline also announced two new routes from Heathrow for the winter season.  From October 25, 2015, it will start flights to Reykjavik while services to Salzburg will commence on December 5, 2015.

On June 1, 2015, Iberia resumed its flights to Havana. The five per week service between Madrid and the Cuban capital is operated on Airbus A330 aircraft with new longhaul cabins. These new flights aim to strengthen further Iberia's leadership between Europe and Latin America.

On June 9, 2015, Vueling announced that it had become a member of IATA (International Air Transport Association). The airline will benefit from lower costs on transactions with IATA members.

On June 17, 2015, the chief executives of IAG, Air France-KLM, EasyJet, Lufthansa Group and Ryanair announced that they will work together to develop an EU aviation strategy which will support growth and jobs across Europe, strengthen the sector and provide more choice and competitive fares to European passengers. This is in response to a consultation by the EU Transport Commissioner Violeta Bulc.

Objectives

Our mission is to be the leading international airline group. This means we will:

• win the customer through service and value across our global network;

• deliver higher returns to our shareholders through leveraging cost and revenue opportunities across the Group;

• attract and develop the best people in the industry;

• provide a platform for quality international airlines, leaders in their markets, to participate in consolidation;

• retain the distinct cultures and brands of individual airlines.

By accomplishing our mission, IAG will help to shape the future of the industry, set new standards of excellence and provide sustainability, security and growth.

INTERNATIONAL CONSOLIDATED AIRLINES GROUP S.A.

Unaudited Condensed Consolidated Interim Financial Statements

January 1, 2015 - June 30, 2015

CONSOLIDATED INCOME STATEMENT
	Six months to June 30
€ million	2015	2014
Passenger revenue	9,119	8,177
Cargo revenue	505	488
Other revenue	739	624
Total revenue	10,363	9,289
Employee costs	2,328	2,096
Fuel, oil costs and emissions charges	3,033	2,898
Handling, catering and other operating costs	1,061	982
Landing fees and en-route charges	827	734
Engineering and other aircraft costs	700	606
Property, IT and other costs	466	486
Selling costs	459	437
Depreciation, amortisation and impairment	620	571
Aircraft operating lease costs	305	260
Currency differences	9	(11)
Total expenditure on operations	9,808	9,059
Operating profit	555	230
Finance costs	(141)	(117)
Finance income	19	13
Net currency retranslation charges	(29)	(1)
Gains on derivatives not qualifying for hedge accounting	15	17
Net gain related to available-for-sale financial assets	2	9
Share of post-tax profits in associates	-	1
(Loss)/gain on sale of property, plant and equipment and investments	(3)	4
Net financing charge relating to pensions	(6)	(1)
Profit before tax	412	155
Tax	(80)	(59)
Profit after tax for the period	332	96
Attributable to:
Equity holders of the parent	322	86
Non-controlling interest	10	10
	332	96
Basic earnings per share (€ cents)	15.8	4.2
Diluted earnings per share (€ cents)	15.4	4.2

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
	Six months to June 30
€ million	2015	2014
Items that may be reclassified subsequently to net profit
Cash flow hedges:
Fair value movements in equity	222	103
Reclassified and reported in net profit	608	1
Available-for-sale financial assets:
Fair value movements in equity	(2)	30
Reclassified and reported in net profit	(5)	(9)
Currency translation differences	298	149
Items that will not be reclassified to net profit
Remeasurements of post-employment benefit obligations	(152)	-
Total other comprehensive income for the period, net of tax	969	274
Profit after tax for the period	332	96
Total comprehensive income for the period	1,301	370
Total comprehensive income is attributable to:
Equity holders of the parent	1,291	360
Non-controlling interest	10	10
	1,301	370
Items in the consolidated statement of comprehensive income above are disclosed net of tax.

CONSOLIDATED BALANCE SHEET
€ million	June 30, 2015	December 31, 2014
Non-current assets
Property, plant and equipment	12,706	11,784
Intangible assets	2,582	2,438
Investments in associates	31	27
Available-for-sale financial assets	88	84
Employee benefit assets	834	855
Derivative financial instruments	88	80
Deferred tax assets	723	769
Other non-current assets	213	188
	17,265	16,225
Current assets
Non-current assets held for sale	5	18
Inventories	481	424
Trade receivables	1,703	1,252
Other current assets	1,038	611
Derivative financial instruments	204	178
Other current interest-bearing deposits	4,197	3,416
Cash and cash equivalents	2,224	1,528
	9,852	7,427
Total assets	27,117	23,652
Shareholders' equity
Issued share capital	1,020	1,020
Share premium	5,867	5,867
Treasury shares	(21)	(6)
Other reserves	(2,091)	(3,396)
Total shareholders' equity	4,775	3,485
Non-controlling interest	307	308
Total equity	5,082	3,793
Non-current liabilities
Interest-bearing long-term borrowings	6,272	5,904
Employee benefit obligations	1,197	1,324
Deferred tax liability	457	278
Provisions for liabilities and charges	2,044	1,967
Derivative financial instruments	171	359
Other long-term liabilities	245	226
	10,386	10,058
Current liabilities
Current portion of long-term borrowings	844	713
Trade and other payables	3,808	3,281
Deferred revenue on ticket sales	5,760	3,933
Derivative financial instruments	788	1,313
Current tax payable	36	57
Provisions for liabilities and charges	413	504
	11,649	9,801
Total liabilities	22,035	19,859
Total equity and liabilities	27,117	23,652

CONSOLIDATED CASH FLOW STATEMENT
	Six months to June 30
€ million	2015		2014
Cash flows from operating activities
Operating profit	555		230
Depreciation, amortisation and impairment	620		571
Movement in working capital and other non-cash movements	907		1,109
Employer contributions to pension schemes	(484)		(121)
Pension scheme service costs	127		100
Interest paid	(97)		(74)
Taxation	(37)		3
Net cash flows from operating activities from continuing operations	1,591		1,818
Net cash flows used in operating activities from discontinued operations	-		(5)
Net cash flows from operating activities	1,591		1,813
Cash flows from investing activities
Acquisition of property, plant and equipment and intangible assets	(606)		(1,332)
Sale of property, plant and equipment and intangible assets	103		233
Net proceeds from sale of investments	6		16
Interest received	23		18
Increase in other current interest-bearing deposits	(483)		(900)
Dividends received	1		-
Other investing movements	3		9
Net cash flows from investing activities	(953)		(1,956)
Cash flows from financing activities
Net proceeds from long-term borrowings	325		726
Repayment of borrowings	(72)		(172)
Repayment of finance leases	(288)		(147)
Acquisition of treasury shares	(20)		(23)
Dividend of a subsidiary to non-controlling interest	(1)		-
Distributions made to holders of perpetual securities	(10)		(10)
Net cash flows from financing activities	(66)		374
Net increase in cash and cash equivalents	572		231
Net foreign exchange differences	124		51
Cash and cash equivalents at 1 January	1,528		1,541
Cash and cash equivalents at period end	2,224		1,823
Interest-bearing deposits maturing after more than three months	4,197		3,081
Cash, cash equivalents and other interest-bearing deposits	6,421		4,904

	CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
	For the six months to June 30, 2015
		Issued share capital	Share premium	Treasury shares	Other reserves(1)	Total shareholders' equity	Non-controlling interest	Total equity
	€ million
	January 1, 2015	1,020	5,867	(6)	(3,396)	3,485	308	3,793
	Total comprehensive income for the period (net of tax)	-	-	-	1,291	1,291	10	1,301
	Cost of share-based payments	-	-	-	17	17	-	17
	Vesting of share-based payment schemes	-	-	5	(3)	2	-	2
	Acquisition of treasury shares	-	-	(20)	-	(20)	-	(20)
	Dividend of a subsidiary	-	-	-	-	-	(1)	(1)
	Distributions made to holders of perpetual securities	-	-	-	-	-	(10)	(10)
	June 30, 2015	1,020	5,867	(21)	(2,091)	4,775	307	5,082

⁽¹⁾Closing balance includes a retained deficit of €50 million (excluding pensions restatement: retained earnings of €1,999 million).

	For the six months to June 30, 2014
		Issued share capital	Share premium	Treasury shares	Other reserves(1)	Total shareholders' equity	Non-controlling interest	Total equity
	€ million
	January 1, 2014	1,020	5,867	(42)	(2,936)	3,909	307	4,216
	Total comprehensive income for the period (net of tax)	-	-	-	360	360	10	370
	Cost of share-based payments	-	-	-	16	16	-	16
	Vesting of share-based payment schemes	-	-	57	(56)	1	-	1
	Acquisition of treasury shares	-	-	(23)	-	(23)	-	(23)
	Distributions made to holders of perpetual securities	-	-	-	-	-	(10)	(10)
	June 30, 2014	1,020	5,867	(8)	(2,616)	4,263	307	4,570

⁽¹⁾Closing balance includes a retained deficit of €768 million (excluding pensions restatement: retained earnings of €1,281 million).

NOTES TO THE ACCOUNTS

For the six months to June 30, 2015

1.             Corporate Information AND BASIS OF PREPARATION

International Consolidated Airlines Group S.A. (hereinafter 'International Airlines Group', 'IAG' or the 'Group') is a leading European airline group, formed to hold the interests of airline and ancillary operations. IAG is a Spanish company registered in Madrid and was incorporated on April 8, 2010. On January 21, 2011 British Airways Plc and Iberia Líneas Aéreas de España S.A. Operadora (hereinafter 'British Airways' and 'Iberia' respectively) completed a merger transaction becoming the first two airlines of the Group. Vueling Airlines S.A. ('Vueling') was acquired on April 26, 2013.

IAG shares are traded on the London Stock Exchange's main market for listed securities and also on the stock exchanges of Madrid, Barcelona, Bilbao and Valencia (the 'Spanish Stock Exchanges'), through the Spanish Stock Exchanges Interconnection System (Mercado Continuo Español).

The condensed consolidated interim financial statements were prepared in accordance with IAS 34 and authorised for issue by the Board of Directors on July 30, 2015. The condensed consolidated interim financial statements herein are not the Company's statutory accounts and are unaudited. The Directors consider that the Group has adequate resources to remain in operation for the foreseeable future and have therefore continued to adopt the going concern basis in preparing the interim financial statements.

The basis of preparation and accounting policies set out in the IAG Annual Report and Accounts for the year to December 31, 2014 have been applied in the preparation of these condensed consolidated interim financial statements, except as disclosed in note 2. IAG's financial statements for the year to December 31, 2014 have been filed with the Registro Mercantil de Madrid, and are in accordance with the International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and with those of the Standing Interpretations issued by the IFRS Interpretation Committee. The report of the auditors on those financial statements was unqualified.

2.             Accounting Policies

The Group has adopted the following standards, interpretations and amendments from January 1, 2015:

IFRIC 21 'Levies'; effective for periods beginning on or after June 17, 2014. IFRIC 21 clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. Retrospective application is required for IFRIC 21. The application of this standard has no impact on the Group's net result or net assets.

3.             SEASONALITY

The Group's business is highly seasonal with demand strongest during the summer months. Accordingly higher revenues and operating profits are usually expected in the latter six months of the financial year than in the first six months.

4.             SEGMENT INFORMATION

a.             Business segments

British Airways, Iberia and Vueling are managed as individual operating companies. Each airline operates its network operations as a single business unit. The chief operating decision maker is responsible for allocating resources and assessing performance of the operating segments, and has been identified as the IAG Management Committee. The IAG Management Committee makes resource allocation decisions based on network profitability, primarily by reference to the passenger markets in which the companies operate. The objective in making resource allocation decisions is to optimise consolidated financial results. Therefore, based on the way the Group treats its businesses, and the manner in which resource allocation decisions are made, the Group has three (2014: three) reportable operating segments for financial reporting purposes, reported as British Airways, Iberia and Vueling.

4.              SEGMENT INFORMATION continued                                 

a.	Business segments continued
	For the six months to June 30, 2015	2015
	€ million	British Airways	Iberia	Vueling	Other Group companies	Total
	Revenue
	External revenue	7,536	2,041	786	-	10,363
	Inter-segment revenue	16	175	-	69	260
	Segment revenue	7,552	2,216	786	69	10,623
	Depreciation, amortisation and impairment	(523)	(88)	(6)	(3)	(620)
	Operating profit/(loss)	570	(4)	(5)	(6)	555
	Net non-operating costs					(143)
	Profit before tax					412
	For the six months to June 30, 2014	2014
	€ million	British Airways	Iberia	Vueling	Other Group companies	Total
	Revenue
	External revenue	6,738	1,859	692	-	9,289
	Inter-segment revenue	18	110	1	52	181
	Segment revenue	6,756	1,969	693	52	9,470
	Depreciation and amortisation	(488)	(76)	(5)	(2)	(571)
	Operating profit/(loss)	327	(95)	-	(2)	230
	Net non-operating costs					(75)
	Profit before tax					155

b.             Geographical analysis

	Revenue by area of original sale
			Six months to June 30
	€ million		2015	2014
	UK		3,826	3,239
	Spain		1,577	1,420
	USA		1,582	1,365
	Rest of world		3,378	3,265
			10,363	9,289

	Assets by area
	June 30, 2015
	€ million	Property, plant and equipment	Intangible assets
	UK	10,999	1,329
	Spain	1,675	1,213
	USA	26	14
	Rest of world	6	26
	Total	12,706	2,582
	December 31, 2014
	€ million	Property, plant and equipment	Intangible assets
	UK	10,131	1,184
	Spain	1,624	1,218
	USA	24	12
	Rest of world	5	24
	Total	11,784	2,438

5.             FINANCE COSTS AND INCOME

		Six months to June 30
	€ million	2015	2014
	Finance costs
	Interest payable on bank and other loans, finance charges payable under finance leases	(132)	(101)
	Unwinding of discount on provisions	(11)	(18)
	Capitalised interest on progress payments	1	1
	Change in fair value of cross currency swaps	1	1
	Total finance costs	(141)	(117)
	Finance income
	Interest on other interest-bearing deposits	19	13
	Total finance income	19	13
	Net charge relating to pensions
	Net financing charge relating to pensions	(6)	(1)
	Net financing charge relating to pensions	(6)	(1)

6.             Tax

The tax charge for the six months to June 30, 2015 is €80 million (2014: €59 million charge) and the effective tax rate is 19 per cent.

Following announcements in the recent UK budget, legislation is due to be enacted in the second half of the year reducing the UK rate of corporation tax to 19 per cent effective from April 1, 2017 and 18 per cent effective from April 1, 2020. The effect of the corporation tax rate reduction is expected to be a deferred tax credit of €86 million through the income statement and a deferred tax charge of €6 million through reserves.

7.             EARNINGS PER SHARE

The number of shares in issue at June 30, 2015 and 2014 was 2,040,078,523 ordinary shares with a par value of €0.50 each.

		Six months to June 30
	Millions	2015	2014
	Weighted average number of ordinary shares outstanding	2,039	2,034
	Weighted average number for diluted earnings per share	2,161	2,068
		Six months to June 30
	€ cents	2015	2014
	Basic earnings per share	15.8	4.2
	Diluted earnings per share	15.4	4.2

8.             DIVIDENDS

The Directors propose that no dividend be paid for the six months to June 30, 2015 (June 30, 2014: nil).

9.             PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

	€ million	Property, plant and equipment	Intangible assets
	Net book value at January 1, 2015	11,784	2,438
	Additions	575	69
	Disposals	(102)	(31)
	Reclassifications	(11)	11
	Depreciation, amortisation and impairment	(591)	(29)
	Exchange movements	1,051	124
	Net book value at June 30, 2015	12,706	2,582
	€ million	Property, plant and equipment	Intangible assets
	Net book value at January 1, 2014	10,228	2,196
	Additions	1,295	52
	Disposals	(229)	-
	Depreciation, amortisation and impairment	(549)	(22)
	Exchange movements	447	50
	Net book value at June 30, 2014	11,192	2,276

Capital expenditure authorised and contracted but not provided for in the accounts amounts to €9,438 million (December 31, 2014: €9,027 million). The majority of capital expenditure commitments are denominated in US dollars, and as such are subject to fluctuations in exchange rates.

10.           IMPAIRMENT REVIEW

Goodwill and intangible assets with indefinite lives are tested for impairment annually (in the fourth quarter) and when circumstances indicate the carrying value may be impaired. The key assumptions used to determine the recoverable amount for the different cash generating units are disclosed in the Annual Report and Accounts for the year to December 31, 2014. For the six months to June 30, 2015 there are no indicators that the carrying value may exceed the recoverable amount.

11.           NON-CURRENT ASSETS HELD FOR SALE

The non-current assets held for sale of €5 million represent five Boeing 737 engines. These are presented within the British Airways operating segment and will exit the business within 12 months of June 30, 2015.

At December 31, 2014 the non-current assets held for sale of €18 million represented one settlement day outstanding for the remaining investment of 0.075 per cent in Amadeus (€11 million) and six Boeing 737 engines (€7 million). These were presented within the Iberia and British Airways segments respectively.

Assets held for sale with a net book value of €13 million were disposed of during the six months to June 30, 2015, of which €11 million related to the sale of the remaining 0.075 per cent investment in Amadeus (which represented one settlement day outstanding) and resulted in a gain of €1 million, and €2 million related to the sale of one Boeing 737 engine, resulting in a loss of €1 million.

12.           FINANCIAL INSTRUMENTS

a.             Financial assets and liabilities by category

The detail of the Group's financial instruments at June 30, 2015 and December 31, 2014 by nature and classification for measurement purposes is as follows:

	At June 30, 2015	Financial assets
	€ million	Loans and receivables	Derivatives used for hedging	Available-for-sale	Non-financial assets	Total carrying amount by balance sheet item
	Non-current assets
	Available-for-sale financial assets	-	-	88	-	88
	Derivative financial instruments	-	88	-	-	88
	Other non-current assets	190	-	-	23	213
	Current assets
	Trade receivables	1,703	-	-	-	1,703
	Other current assets	359	-	-	679	1,038
	Derivative financial instruments	-	204	-	-	204
	Other current interest-bearing deposits(1)	4,197	-	-	-	4,197
	Cash and cash equivalents	2,224	-	-	-	2,224

⁽¹⁾Included within other current interest-bearing deposits is €6 million representing approximately 1.7 billion bolívares held in Venezuela valued at SIMADI.

			Financial liabilities
	€ million		Loans and payables	Derivatives used for hedging	Non-financial liabilities	Total carrying amount by balance sheet item
	Non-current liabilities
	Interest-bearing long-term borrowings		6,272	-	-	6,272
	Derivative financial instruments		-	171	-	171
	Other long-term liabilities		8	-	237	245
	Current liabilities
	Current portion of long-term borrowings		844	-	-	844
	Trade and other payables		3,424	-	384	3,808
	Derivative financial instruments		-	788	-	788

12.	FINANCIAL INSTRUMENTS continued
a.	Financial assets and liabilities by category continued
	At December 31, 2014	Financial assets
	€ million	Loans and receivables	Derivatives used for hedging	Available-for-sale	Non-financial assets	Total carrying amount by balance sheet item
	Non-current assets
	Available-for-sale financial assets	-	-	84	-	84
	Derivative financial instruments	-	80	-	-	80
	Other non-current assets	167	-	-	21	188
	Current assets
	Trade receivables	1,252	-	-	-	1,252
	Other current assets	244	-	-	367	611
	Non-current assets held for sale	-	-	11	7	18
	Derivative financial instruments	-	178	-	-	178
	Other current interest-bearing deposits(1)	3,416	-	-	-	3,416
	Cash and cash equivalents	1,528	-	-	-	1,528

             ⁽¹⁾Included within other current interest-bearing deposits is €18 million representing approximately 1.7 billion bolívares held in Venezuela valued at SICAD II.

			Financial liabilities
	€ million		Loans and payables	Derivatives used for hedging	Non-financial liabilities	Total carrying amount by balance sheet item
	Non-current liabilities
	Interest-bearing long-term borrowings		5,904	-	-	5,904
	Derivative financial instruments		-	359	-	359
	Other long-term liabilities		7	-	219	226
	Current liabilities
	Current portion of long-term borrowings		713	-	-	713
	Trade and other payables		3,017	-	264	3,281
	Derivative financial instruments		-	1,313	-	1,313

b.             Fair value of financial assets and financial liabilities

The fair values of the Group's financial instruments are disclosed in hierarchy levels depending on the nature of the inputs used in determining the fair values as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices present actual and regularly occurring market transactions on an arm's length basis;

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of financial instruments that are not traded in an active market is determined by valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates; and

Level 3: Inputs for the asset or liability that are not based on observable market data.

The fair value of cash and cash equivalents, other current interest-bearing deposits, trade receivables, other current assets and trade and other payables approximate their carrying value largely due to the short-term maturities of these items.

12.           FINANCIAL INSTRUMENTS continued

b.             Fair value of financial assets and financial liabilities continued

The following methods and assumptions were used by the Group in estimating its fair value disclosures for financial instruments:

Instruments included in Level 1 comprise listed asset investments classified as available-for-sale and interest-bearing borrowings which are stated at market value at the balance sheet date.

Instruments included in Level 2 include derivatives and interest-bearing borrowings.

Forward currency transactions and over-the-counter fuel derivatives are entered into with various counterparties, principally financial institutions with investment grade ratings. These are measured at the market value of instruments with similar terms and conditions at the balance sheet date using forward pricing models. Counterparty and own credit risk is deemed to be not significant.

At December 31, 2014 Level 2 also included a hedge of the available-for-sale asset which took the form of an equity collar. The valuation of this collar was based on a Black Scholes valuation model using share price spot rate, strike price, stock volatility and the euro interest rate curve.

The fair value of the Group's interest-bearing borrowings including leases are determined by discounting the remaining contractual cash flows at the relevant market interest rates at the balance sheet date.

All resulting fair value estimates are included in Level 2 except for certain investments which are classified as Level 3.

The carrying amounts and fair values of the Group's financial assets and liabilities at June 30, 2015 are set as follows:

		Fair value					Carrying value
	€ million	Level 1	Level 2	Level 3	Total		Total
	Financial assets
	Available-for-sale financial assets	17	-	71	88		88
	Derivatives(1)	-	292	-	292		292
	Financial liabilities
	Interest-bearing borrowings	1,088	6,776	-	7,864		7,116
	Derivatives(2)	-	959	-	959		959
	(1)Current portion of derivative financial assets is €204 million.
	(2)Current portion of derivative financial liabilities is €788 million.

	At December 31, 2014
		Fair value					Carrying value
	€ million	Level 1	Level 2	Level 3	Total		Total
	Financial assets
	Available-for-sale financial assets	19	-	65	84		84
	Derivatives(1)	-	258	-	258		258
	Financial liabilities
	Interest-bearing borrowings	892	6,256	-	7,148		6,617
	Derivatives(2)	-	1,672	-	1,672		1,672
	(1)Current portion of derivative financial assets is €178 million.
	(2)Current portion of derivative financial liabilities is €1,313 million.

There have been no transfers between levels of fair value hierarchy during the period.

Out of the financial instruments listed in the previous table, only the interest-bearing borrowings are not measured at fair value on a recurring basis.

12.	FINANCIAL INSTRUMENTS continued
c.	Level 3 financial assets reconciliation
	The following table summarises key movements in Level 3 financial assets:
	€ million	June 30, 2015	December 31, 2014
	Opening balance for the year	65	22
	Gains recognised in the Income statement(1)	-	1
	Gains recognised in Other comprehensive income(2)	-	48
	Settlements	-	(7)
	Exchange movements	6	1
	Closing balance for the period	71	65
	(1)Included in Net gain relating to available-for sale-financial assets in the consolidated Income statement.
	(2)Included in Available-for-sale financial assets - Fair value movements in equity in the consolidated Statement of other comprehensive income.
	The fair value of Level 3 financial assets cannot be measured reliably; as such these assets are stated at historic cost less accumulated impairment losses with the exception of the Group's investment in The Airline Group Limited. This unlisted investment had previously been valued at nil, since the fair value could not be reasonably calculated. During the year to December 31, 2014 other shareholders disposed of a combined holding of 49.9 per cent providing a market reference from which to determine a fair value. The investment remains classified as a Level 3 financial asset due to the valuation criteria applied not being observable, with the resultant fair value uplift in the prior period being non-recurring in nature.

13.           Borrowings

		June 30,	December 31,
		2015	2014
	Current
	Bank and other loans	190	164
	Finance leases	654	549
		844	713
	Non-current
	Bank and other loans	1,378	1,069
	Finance leases	4,894	4,835
		6,272	5,904

In May 2015, the Group issued bonds totaling €125 million; €70 million 3.5 per cent coupon repayable in 2022, and €55 million 3.75 per cent coupon repayable in 2027.

14.           SHARE BASED PAYMENTS

During the period 4,499,086 conditional shares were awarded under the Group's Performance Share Plan (PSP) to key senior executives and selected members of the wider management team. No payment is due upon the vesting of the shares. The fair value of equity-settled share schemes granted is estimated at the date of the award using the Monte-Carlo model, taking into account the terms and conditions upon which the options were awarded. The following are the inputs to the model for the PSP options granted in the period:

Expected share price volatility: 30 per cent

Expected life of options: 3 years

Weighted average share price: £5.50

The Group also made awards related to the 2014 performance year for qualifying employees under the Incentive Award Deferral Plan (IADP) during the period, under which 1,918,319 conditional shares were awarded.

IAG has agreed to undertake a share buy-back programme where the shares will be purchased on the London Stock Exchange. The programme will start on July 1, 2015 and end no later than April 30, 2016. A maximum of 22,000,000 shares will be delivered to the Company.                       

15.           EMPLOYEE BENEFIT OBLIGATIONS

The Group operates two principal funded defined benefit pension schemes in the UK, the Airways Pension Scheme (APS) and the New Airways Pension Scheme (NAPS), both of which are closed to new members.

						June 30, 2015
	€ million			APS	NAPS	Other	Total
	Scheme assets at fair value			10,240	18,586	484	29,310
	Present value of scheme liabilities			(8,907)	(19,357)	(891)	(29,155)
	Net pension asset/(liability)			1,333	(771)	(407)	155
	Effect of the asset ceiling			(505)	-	-	(505)
	Other employee benefit obligations			-	-	(13)	(13)
	June 30, 2015			828	(771)	(420)	(363)
	Represented by:
	Employee benefit asset						834
	Employee benefit obligation						(1,197)
							(363)
						December 31, 2014
	€ million			APS	NAPS	Other	Total
	Scheme assets at fair value			9,542	16,201	424	26,167
	Present value of scheme liabilities			(8,191)	(17,134)	(795)	(26,120)
	Net pension asset/(liability)			1,351	(933)	(371)	47
	Effect of the asset ceiling			(502)	-	-	(502)
	Other employee benefit obligations			-	-	(14)	(14)
	December 31, 2014			849	(933)	(385)	(469)
	Represented by:
	Employee benefit asset						855
	Employee benefit obligation						(1,324)
							(469)
	The principal assumptions used for the purposes of the actuarial valuations were as follows:
		June 30, 2015				December 31, 2014
	Per cent per annum	APS	NAPS	Other schemes	APS	NAPS	Other schemes
	Discount rate	3.65	3.90	3.4 - 4.1	3.45	3.80	3.4 - 4.1
	Rate of increase in pensionable pay(1)	3.00	3.10	3.5 - 4.0	2.85	2.95	3.5 - 4.0
	Rate of increase of pensions in payment	2.00	2.10	1.5 - 3.5	1.85	1.95	1.5 - 3.5
	RPI rate of inflation(2)	3.00	3.10	3.0 - 3.1	2.85	2.95	3.0 - 3.1
	CPI rate of inflation(2)	2.00	2.10	2.1 - 3.0	1.85	1.95	2.1 - 3.0

⁽¹⁾Rate of increase in pensionable pay is assumed to be in line with the RPI rate of inflation.

⁽²⁾The inflation rate assumptions for NAPS and APS are based on the difference between the yields on index-linked and fixed-interest long-term government bonds. The inflation assumptions are used to determine the rate of increase for pensions in payment and the rate of increase in deferred pensions where there is such an increase.

16.           PROVISIONS FOR LIABILITIES AND CHARGES

	€ million	Employee leaving indemnities and other employee related provisions	Restructuring	Legal claims provisions	Restoration and handback provisions	Other provisions	Total
	Net book value at January 1, 2015	552	895	135	771	118	2,471
	Provisions recorded during the period	10	34	2	112	33	191
	Utilised during the period	(9)	(101)	(1)	(62)	(50)	(223)
	Release of unused amounts and other movements	-	(8)	(7)	(12)	(38)	(65)
	Unwinding of discount	5	2	1	3	-	11
	Exchange differences	2	4	1	59	6	72
	Net book value at June 30, 2015	560	826	131	871	69	2,457
	Analysis:
	Current	27	223	4	132	27	413
	Non-current	533	603	127	739	42	2,044

17.           CONTINGENT LIABILITIES

The Group has certain contingent liabilities and guarantees, which at June 30, 2015 amounted to €174 million (December 31, 2014: €138 million). No material losses are likely to arise from such contingent liabilities and guarantees. The Group also had the following claims:

Cargo

The Group is party to a number of legal proceedings in the English courts relating to a decision by the European Commission in 2010 which fined British Airways and ten other airline groups for participating in a cartel in respect of air cargo prices. The European Commission's decision is currently the subject of appeal, but has led to a large number of claimants seeking, in proceedings brought in the English courts and elsewhere, to recover damages from British Airways and the other airlines which they claim arise from the alleged cartel activity. It is not possible at this stage to predict the outcome of the proceedings, which British Airways will vigorously defend. British Airways has, or will, join in to the proceedings the other airlines alleged to have participated in cartel activity to obtain a contribution to such damages, if any, awarded.

The Group is also party to similar litigation in a number of other jurisdictions, including Germany, the Netherlands, Israel and Canada, together with a number of other airlines. At present, the outcome of the proceedings is unknown. In each case, the precise effect, if any, of the alleged cartelising activity on the claimants will need to be assessed.

On the basis of latest information obtained and advice from legal counsel, we are currently unable to determine whether the Group has an existing obligation as a result of the past event.

A number of other lawsuits and regulatory proceedings are pending, the outcome of which in the aggregate is not expected to have a material effect on the Group's financial position or results of operations.

18.           RELATED PARTY TRANSACTIONS

The Group had the following transactions in the ordinary course of business with related parties.

	Sales and purchases of goods and services:
		Six months to June 30
	€ million	2015	2014
	Sales of goods and services
	Sales to associates	7	27
	Sales to significant shareholders	5	-
	Purchases of goods and services
	Purchases from associates	21	6
	Purchases from significant shareholders	2	-

18.           RELATED PARTY TRANSACTIONS continued

Period end balances arising from sales and purchases of goods and services:

	€ million	June 30, 2015	December 31, 2014
	Receivables from related parties
	Amounts owed by associates	7	5
	Amounts owed by significant shareholders	1	-
	Payables to related parties
	Amounts owed to associates	7	7
	Amounts owed to significant shareholders	-	-
	For the six months to June 30, 2015 the Group has not made any provision for doubtful debts arising relating to amounts owed by related parties (2014: nil).

Board of Directors and Management Committee remuneration

Compensation received by the Group's key management personnel is as follows:

		Six months to June 30
	€ million	2015	2014
	Base salary, fees and benefits
	Board of Directors' remuneration	2	2
	Management Committee remuneration	3	3

At June 30, 2015 the Board of Directors includes remuneration for two Executive Directors (June 30, 2014: two Executive Directors). The Management Committee includes remuneration for eight members (June 30, 2014: eight members).

The Company provides life insurance for all Executive Directors and the Management Committee. At June 30, 2015 the Company's obligation was €26,000 (2014: €23,000).

At June 30, 2015 the transfer value of accrued pensions covered under defined benefit obligation schemes relating to the Management Committee totalled €8 million (2014: €6 million).

No loans or credit transactions were outstanding with Directors or officers of the Group at June 30, 2015 (2014: nil).

19.           POST BALANCE SHEET EVENTS

On May 26, 2015 IAG and the independent directors of Aer Lingus Group plc ('Aer Lingus') reached agreement on the terms of a recommended cash offer for the entire issued ordinary share capital of Aer Lingus to be made by AERL Holding Limited, a wholly incorporated subsidiary of IAG. The offer is for €2.55 per Aer Lingus share, comprising a cash payment of €2.50 per Aer Lingus share and the payment of a cash dividend of €0.05 per Aer Lingus share (paid by Aer Lingus on May 29, 2015 to Aer Lingus shareholders on the register of members on May 1, 2015). The transaction values Aer Lingus' entire issued ordinary share capital at approximately €1.4 billion.  The offer, extended to August 18, 2015, is subject to the terms and conditions that have not already been satisfied which are set out in Appendix I of the Offer document (www.iairgroup.com), in particular acceptance of the Offer having been received in respect of the Aer Lingus shares held by the Ryanair Group.

LIABILITY STATEMENT OF COMPANY DIRECTORS FOR THE PURPOSES ENVISAGED UNDER ARTICLE 11.1.b OF SPANISH ROYAL DECREE 1362/2007 OF 19 OCTOBER (REAL DECRETO 1362/2007).

At a meeting of the Board of Directors held on July 30, 2015, the Directors of International Consolidated Airlines Group, S.A. declare that, to the best of their knowledge, the half year condensed consolidated financial statements for the six months to June 30, 2015 were prepared in accordance with applicable accounting principles (IAS 34 as adopted by the European Union), offer a true and fair view of the assets, liabilities, financial situation, cash flows and the results of International Consolidated Airlines Group, S.A. and of the companies that fall within the consolidated group taken as a whole, and the condensed consolidated management report includes an accurate analysis of the required information also in accordance with the Financial Conduct Authority's DTR 4.2.7R and DTR4.2.8R (English regulation) including an indication of important events in the period, a description of the principal risks and uncertainties and a list of material related party transactions.

July 30, 2015

	Antonio Vázquez Romero Chairman		Martin Faulkner Broughton Deputy Chairman
	William Matthew Walsh Chief Executive Officer		Enrique Dupuy de Lôme Chávarri Chief Financial Officer
	César Alierta Izuel		Patrick Jean Pierre Cescau
	Denise Patricia Kingsmill		James Arthur Lawrence
	María Fernanda Mejía Campuzano		Kieran Charles Poynter
	Marjorie Morris Scardino		Alberto Terol Esteban

AIRCRAFT FLEET

	Number in service with Group companies
	On balance sheet fixed assets	Off balance sheet operating leases	Total June 30,	Total December 31,		Changes since December 31,		Future deliveries	Options
			2015	2014		2014
Airbus A318	2	-	2	2		-		-	-
Airbus A319	34	29	63	61		2		2	-
Airbus A320	50	135	185	172		13		63	178
Airbus A321	23	13	36	36		-		16	-
Airbus A330	-	8	8	8		-		8	14
Airbus A340-300	7	-	7	7		-		-	-
Airbus A340-600	4	13	17	17		-		-	-
Airbus A350	-	-	-	-		-		26	60
Airbus A380	9	-	9	8		1		3	7
Boeing 737-400	3	-	3	5		(2)		-	-
Boeing 747-400	42	-	42	43		(1)		-	-
Boeing 757-200	1	2	3	3		-		-	-
Boeing 767-300	14	-	14	14		-		-	-
Boeing 777-200	41	5	46	46		-		-	-
Boeing 777-300	9	3	12	12		-		-	-
Boeing 787	8	-	8	8		-		34	18
Embraer E170	6	-	6	6		-		-	-
Embraer E190	9	2	11	11		-		1	15
Group total	262	210	472	459		13		153	292
As well as those aircraft in service the Group also holds 21 aircraft (2014: 20) not in service.

 

END

 

 

IR WGUCUMUPAGRU