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SIX MONTHS RESULTS ANNOUNCEMENT

International Airlines Group today (July 29) presented Group consolidated results for the six months ended June 30, 2011. In addition, IAG presented combined results for the six months ended June 30, 2011 including Iberia's first 21 days of January.

IAG period highlights on combined results:

·      Second quarter operating profit of €190 million, before exceptional items (2010: operating loss €71 million). Passenger unit revenue up 9.4 per cent for the quarter and non-fuel unit costs down 5.8 per cent

·      Operating profit for the half year to June 30, 2011 of €88m before exceptional items (2010: operating loss €309 million)

·      Profit before tax for the half year of €39 million (2010: loss before tax of €419 million)

·      Revenue for the half year up 17.9 per cent to €7,773 million (2010: €6,594 million), including €76 million or 1.1 per cent currency translation

·      Passenger unit revenue for the half year up 7.5 per cent, on top of volume increases of 10.4 per cent

·      Fuel costs up 34.8 per cent to €2,439 million (2010: €1,809 million)

·      Other operating costs before exceptional items, up 4.2 per cent at €5,307 million, including €53 million of adverse currency translation. Non fuel unit costs down 5.6 per cent, or 5.9 per cent at constant currency

·      Cash down €161 million to €4,191 million (December 2010: €4,352 million)

·      Group net debt down €415 million to €480 million (December 2010: €895 million)

Willie Walsh, IAG chief executive, said: "This is a good first half performance with a return to operating profitability. In the quarter, unit revenue rose by 7.6 per cent with continued strength in premium markets. Our focus on cost control remains with non-fuel unit costs down 5.8 per cent in the quarter but fuel is still a significant issue with costs up 32.0 per cent. While last year's figures for this quarter were affected by disruption, the underlying trends remain positive.

"We continue to match capacity to demand. Capacity was up 11.7 per cent in the quarter while traffic was up 15.7 per cent. Against a background of economic uncertainty, London remains a strong market.

"IAG is on target to deliver its year one synergies. We are already making cost savings through joint procurement in areas such as insurance and airport handling. We have established a single cargo business and introduced integrated sales and airport teams in several key markets. Customers are also directly benefiting through airline website cross-selling, more fare and schedule choice on overlapping longhaul routes and easier access to more destinations via new codeshares".

(1)    This financial data is based on the combined results of operations of British Airways, Iberia and IAG the company for the six month periods ended June 30, 2011 and 2010, and the balance sheet as at December 31, 2010.  These combined financial statements eliminate cross holdings and related party transactions, however the comparatives do not reflect any adjustments required to account for the merger transaction. Financial ratios are before exceptional items.

(2)    The IAG June 30, 2011 income statement is the consolidated results of BA and IAG the company for the six month periods ended June 30, 2011 and Iberia from January 22, 2011 to June 30, 2011. The IAG June 30, 2010 comparative is solely the results of BA.

(3)    Adjusted gearing is net debt plus capitalised operating aircraft lease costs, divided by net debt plus capitalised operating aircraft lease costs and equity.

Trading Outlook

We expect significant growth in operating profit this year, with improvements in both our unit revenue and unit cost performance versus 2010 and are on track to reach our synergy targets.

Our long haul business is stable, with strength in the premium sector, but the short haul European market remains highly competitive. We expect the impact of events in Japan and North Africa / Middle East to have a negative impact on operating profit for the full year of €90 to €100 million.

With current fuel prices, hedge positions and foreign exchange rates, we expect our total fuel cost for the year to be approximately €5.2 billion. Although we achieved 50 per cent recovery of the fuel cost impact in H1 through revenue initiatives, it should be noted that this task becomes progressively harder through the year as we face tougher revenue comparables with last year: cargo performance was particularly strong in H2 last year, our hedged fuel price will gradually converge with spot rates, and the European economic outlook remains uncertain.

Capacity growth is mainly concentrated in core markets and is being achieved with no material growth in fleet or staff. Our 2011 ASK growth plan (+7 to +8 per cent reported / +4 to +5 per cent underlying) remains essentially unchanged, although we are currently evaluating some reduction in capacity growth for the winter. 

Forwarding-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 Consolidated International Airlines Group S.A. (the 'Group') plans and objectives for the 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 some of the most important risks in this regard is given in the shareholder documentation in respect of the merger issued on October 26, 2010 and in the Securities Note and Summary issued on January 10, 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

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