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News Release

3rd Quarter Results
RNS Number : 5210S
International Cons Airlines Group
07 November 2013
 



NINE MONTHS RESULTS ANNOUNCEMENT

 

International Consolidated Airlines Group (IAG) today (November 8, 2013) presented Group consolidated results for the nine months to September 30, 2013.

 

IAG period highlights on results:

 

· Third quarter operating profit €690 million (2012: €270 million) before exceptional items

· At constant currency, third quarter passenger unit revenue up 6.7 per cent (excluding Vueling 7.4 per cent) and non-fuel unit costs down 4.3 per cent (excluding Vueling up 0.6 per cent)

· Operating profit for the nine month period €657 million (2012: €17 million) before exceptional items

· Revenue for the nine month period up 3.9 per cent to €14,113 million

· Passenger unit revenue for the nine month period up 2.3 per cent (5.6 per cent at constant currency)

· Fuel costs for the nine month period down 3.4 per cent to €4,475 million (2012: €4,633 million). Fuel unit costs down 5.4 per cent at constant currency

· Non-fuel costs before exceptional items for the nine month period up 0.5 per cent at €8,981 million. Non-fuel unit costs down 3.5 per cent, down 1.1 per cent at constant currency

· Cash €3,740 million at September 30, 2013, up €831 million from December including €591 million of Vueling cash

· Adjusted gearing down 2 points to 49 per cent including Vueling 

 

Performance summary:

 

  

  

  

  

  

Nine months to September 30

  

Financial data € million  

2013

2012

(restated)(1)

Higher /

 (lower)  

Passenger revenue

12,299 

11,560 

6.4 %

Total revenue

14,113 

13,588 

3.9 %

Operating profit before exceptional items

657 

17 

  

Exceptional items

(309)

(8)

  

Operating profit after exceptional items

348 

  

Profit after tax

77 

57 

  

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

3.2 

(0.2)

  

Operating figures  

2013

2012

Higher /

 (lower)  

Available seat kilometres (ASK million)

172,234 

165,565 

4.0 %

Revenue passenger kilometres (RPK million)

140,220 

133,934 

4.7 %

Seat factor (per cent)

81.4 

80.9 

0.5pts

Passenger yield per RPK (€ cents)

8.77 

8.63 

1.6 %

Passenger unit revenue per ASK (€ cents)

7.14 

6.98 

2.3 %

Non-fuel unit costs per ASK (€ cents)

5.21 

5.40 

(3.5)%

€ million

At September 30, 2013

 At December 31,

2012

Higher /

(lower)  

Cash and interest bearing deposits

3,740 

2,909 

28.6 %

Adjusted net debt(2)

5,252 

5,345 

(1.7)%

Adjusted gearing(3)

49%

51%

(2pts)

 

(1)    Restated for amendment to IAS 19 'Employee Benefits' accounting standard.

(2)    Adjusted net debt is net debt plus capitalised operating aircraft lease costs.

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

 

Willie Walsh, IAG chief executive, said:

"These are strong results with an operating profit in the quarter of €690 million. The Group's revenue was up 6.9 per cent and overall costs were down 1.5 per cent. At constant currency, passenger unit revenue was up 6.7 per cent and non-fuel unit costs were down 4.3 per cent."

 

"Iberia made an operating profit of €74 million in the quarter compared to an operating profit of €1 million last year. This is an improved performance, bearing in mind it's the strongest quarter of the year. However, the airline must continue to implement its restructuring plan and reach agreement on productivity changes to bring about long term sustainable profits and growth."

 

"British Airways' operating profit was €477 million, up from €268 million. Its performance continues to benefit from a strong London and transatlantic market as well as a €100 million revenue bounce-back from the Olympic effect last year. In addition, the airline has maintained its focus on cost control."

 

"This is the first full quarter that we have shown Vueling's performance and it made an operating profit of €139 million. Vueling adds value to the Group with its lower costs and successful product strategy. This summer, there was a tourism boost in Barcelona and Vueling was able to capitalise on this seasonal spike due to its leadership position at the airport."

 

"In the nine months, the Group made an operating profit of €657 million with passenger unit revenue up 5.6 per cent at constant currency and non-fuel unit costs down 1.1 per cent."

 

Trading outlook

The Group expects an operating profit for 2013, before exceptional items, of around €740 million.                           

 

Current trading is in line with underlying recent trends.

 

Our capacity plans remain unchanged. For the full year, we expect to grow Group capacity by 5.2 per cent (reduction of 2.4 per cent excluding Vueling).

 

In addition, we should see a reduction in non-fuel unit costs in 2013.

 

Moving into 2014, we expect the driver of revenue growth to shift from yield to volume due to new British Airways route launches and the strong growth of Vueling.

 

 

 

 

 

 

 

 

 

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 Group'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 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 Group'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 2012; this document is 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



 

 CONSOLIDATED INCOME STATEMENT



  




  



  

Nine months to September 30, 2013


Nine months to September 30,

2012 (restated) (1)

 € million

Before exceptional items

Exceptional items

Total


Before exceptional items

Exceptional items

Total

Higher / (lower)


  

  




  




 Passenger revenue

12,299 


12,299 


11,560 


11,560 

6.4 %

 Cargo revenue

797 


797 


888 


888 

(10.2)%

 Other revenue

1,017 


1,017 


1,140 


1,140 

(10.8)%

 Total revenue

14,113 


14,113 


13,588 


13,588 

3.9 %

 Employee costs

3,075 

268 

3,343 


3,158 

34 

3,192 

(2.6)%

 Fuel, oil costs and emissions charges

4,475 

(5)

4,470 


4,633 


4,633 

(3.4)%

 Handling, catering and other operating costs

1,442 


1,442 


1,348 


1,348 

7.0 %

 Landing fees and en-route charges

1,058 


1,058 


974 


974 

8.6 %

 Engineering and other aircraft costs

976 

15 

991 


979 


979 

(0.3)%

 Property, IT and other costs

684 

689 


738 

(25)

713 

(7.3)%

 Selling costs

609 


609 


640 

645 

(4.8)%

 Depreciation, amortisation and impairment

744 

752 


786 


786 

(5.3)%

 Aircraft operating lease costs

355 

18 

373 


322 

(6)

316 

10.2 %

 Currency differences

38 


38 


(7)


(7)


 Total expenditure on operations

13,456 

309 

13,765 


13,571 

13,579 

(0.8)%

 Operating profit

657 

(309)

348 


17 

(8)


 Net non-operating costs

(228)

(17)

(245)


(130)


(130)


 Profit/(loss) before tax from continuing operations

429 

(326)

103 


(113)

(8)

(121)


 Tax

(24)

(2)

(26)


168 

10 

178 


 Profit after tax from continuing operations

405 

(328)

77 


55 

57 


 Loss after tax from discontinued operations


(45)

(45)


 Profit after tax for the period

405 

(328)

77 


55 

(43)

12 


  

  




  




  




  




 Operating figures

2013 (2)




2012 (2)



Higher / (lower)

  

  




  




 Available seat kilometres (ASK million)

172,234 




165,565 



4.0 %

 Revenue passenger kilometres (RPK million)

140,220 




133,934 



4.7 %

 Seat factor (per cent)

81.4 




80.9 



0.5pts

 Passenger numbers (thousands)

50,454 




41,483 



21.6 %

 Cargo tonne kilometres (CTK million)

4,150 




4,519 



(8.2)%

 Passenger yield per RPK

 8.77 




 8.63 



1.6 %

 Passenger unit revenue per ASK

 7.14 




 6.98 



2.3 %

 Cargo yield per CTK

 19.20 




 19.65 



(2.3)%

 Total cost per ASK

 7.81 




 8.20 



(4.8)%

 Fuel cost per ASK

 2.60 




 2.80 



(7.1)%

 Total cost excluding fuel per ASK

 5.21 




 5.40 



(3.5)%

 Aircraft in service

437 




383 



14.1 %

 Average employee number

60,470 




59,430 



1.7 %

  

  




  




  

  




  




(1) Restated for amendment to IAS 19 'Employee Benefits' accounting standard.



  

  




  




(2) Financial ratios are before exceptional items.



 

 CONSOLIDATED INCOME STATEMENT







 

  



 

  

Three months to September 30,

2013


Three months to September 30, 2012

(restated)


 

  









 

 € million

Before exceptional items

Exceptional items

Total


Before exceptional items

Exceptional items

Total

Higher / (lower)


 Passenger revenue

4,801 


4,801 


4,350 


4,350 

10.4 %

 Cargo revenue

256 


256 


298 


298 

(14.1)%

 Other revenue

349 


349 


408 


408 

(14.5)%

 Total revenue

5,406 


5,406 


5,056 


5,056 

6.9 %

 Employee costs

1,006 


1,006 


1,088 

1,090 

(7.5)%

 Fuel, oil costs and emissions charges

1,611 

(2)

1,609 


1,660 


1,660 

(3.0)%

 Handling, catering and other operating costs

518 


518 


497 


497 

4.2 %

 Landing fees and en-route charges

403 


403 


346 


346 

16.5 %

 Engineering and other aircraft costs

350 


350 


344 


344 

1.7 %

 Property, IT and other costs

227 


227 


268 

273 

(15.3)%

 Selling costs

211 


211 


217 

219 

(2.8)%

 Depreciation, amortisation and impairment

246 


246 


274 


274 

(10.2)%

 Aircraft operating lease costs

140 

(1)

139 


113 

(2)

111 

23.9 %

 Currency differences



(21)


(21)


 Total expenditure on operations

4,716 

(3)

4,713 


4,786 

4,793 

(1.5)%

 Operating profit

690 

693 


270 

(7)

263 


 Net non-operating costs

(84)


(84)


(26)


(26)


 Profit before tax from continuing operations

606 

609 


244 

(7)

237 


 Tax

(29)


(29)


16 

17 


 Profit after tax from continuing operations

577 

580 


260 

(6)

254 


 Loss after tax from discontinued operations



(35)

(35)


 Profit after tax for the period

577 

580 


260 

(41)

219 


  









 

  









 

 Operating figures

2013 




2012 



Higher / (lower)

 

  









 

 Available seat kilometres (ASK million)

63,594  




58,298  



9.1 %

 

 Revenue passenger kilometres (RPK million)

53,842  




49,379  



9.0 %

 

 Seat factor (per cent)

84.7  




84.7  



0.0 %

 

 Passenger numbers (thousands)

21,317  




15,762  



35.2 %

 

 Cargo tonne kilometres (CTK million)

1,394  




1,510  



(7.7)%

 

 Passenger yield per RPK

8.92  




8.81  



1.2 %

 

 Passenger unit revenue per ASK

7.55  




7.46  



1.2 %

 

 Cargo yield per CTK

18.36  




19.74  



(7.0)%

 

 Total cost per ASK

7.42  




8.21  



(9.6)%

 

 Fuel cost per ASK

2.53  




2.85  



(11.2)%

 

 Total cost excluding fuel per ASK

4.88  




5.36  



(9.0)%

 

 Average employee number

60,384  




61,340  



(1.6)%

 



 

Financial review for the nine month period to September 30, 2013:

 

Acquisitions

 

The performance for the nine month period to September 30, 2013 includes Vueling operations from the acquisition date of April 26, 2013. Vueling contributed 7.1 per cent to the capacity growth, 5.9 per cent to the revenue growth and earned an operating profit of €166 million.

 

The performance for the nine month period to September 30, 2012 includes bmi's results from April 20, 2012. In 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 month period to September 30, 2013 resulted in a €466 million decrease in reported revenue and a €412 million decrease in operating expenses, reflecting a 4.1 per cent weakening of the pound versus the euro. The weakening of the pound has been more prevalent in the third quarter with a 7.6 per cent decrease.

 

The Group realised transactional exchange gains of €31 million on revenue and exchange losses of €105 million on operating expenses.

 

The net adverse impact of translation and transactional exchange ('constant currency' or 'ccy') on the nine month results was €128 million.

 

Revenue

 

On a capacity increase of 4.0 per cent, passenger revenue was up 6.4 per cent (up 9.8 per cent at ccy) leading to a passenger unit revenue increase of 2.3 per cent (up 5.6 per cent at ccy). Excluding Vueling, capacity was down 3.1 per cent, passenger revenue was down 0.8 per cent (up 2.5 per cent at ccy) and passenger unit revenue increased 2.4 per cent (up 5.9 per cent at ccy).

 

Cargo demand is weak; revenue was down 10.2 per cent (down 8.2 at ccy) on a capacity decrease of 8.2 per cent leading to a 0.1 per cent decrease in yield at constant currency.

 

From April 26, 2013 Iberia's handling and maintenance revenue related to Vueling are eliminated from the Group consolidated results. The impact of the elimination on the nine month period performance was approximately a €70 million reduction in both revenue and costs. Other revenue has also been adversely impacted by the industrial action in Spain due to both losses in productivity during the first quarter and losses of on-going business in the second and third quarters. Other revenues have seen improvements during the period in areas such as BA Holidays.

 

Costs

 

Fuel costs for the nine month period decreased 3.4 per cent to €4,475 million before exceptional items. Fuel unit costs decreased 5.4 per cent at constant currency benefiting from lower fuel prices.

 

Non-fuel costs for the nine months increased 0.5 per cent before exceptional items (increased 3.0 per cent at ccy); non-fuel unit costs were down 3.5 per cent (down 1.1 per cent at ccy). Excluding Vueling, non-fuel unit costs were up 1.5 per cent at constant currency driven by growth in BA Holidays, a non-ASK area of the business.

 

Handling, catering and other operating costs have increased 7.0 per cent (up 10.8 at ccy), from the growth in BA Holidays and the 21.6 per cent increase in passengers flown. Landing fees and en-route charges have risen 8.6 per cent (up 11.5 per cent at ccy) as a result of an increase in the volume of landings due to the addition of Vueling, and increases in airport charges which have exceeded inflation. The rise in handling charges and landing fees are offset by savings in selling and in property, IT and other costs.

 

IAG operating profit for the nine months was €657 million compared to €17 million for the prior period.

 

Non-operating costs for the nine month period were €245 million after exceptional items, compared to €130 million in 2012. The increase in non-operating costs is primarily due to accelerated interest accretion on the £350 million bond which was converted in the period and a decrease in associate income of approximately €30 million since the acquisition of Vueling.

 

The profit before tax for the nine months was €103 million after exceptional items, compared to a loss before tax of €121 million in 2012.

 

The tax charge for the nine month period was €26 million. During the period, €159 million of deferred tax assets related to Iberia's current period losses before tax have not been recognised. In addition, reductions to the UK corporation tax rate to 21 per cent have been substantively enacted resulting in a €128 million tax credit through the Income statement. Excluding these items, the effective tax rate for the nine month period to September 30, 2013 was 4 per cent. The effective tax rate is low as the net losses incurred in Spain are at a higher tax rate than the rate applied to the profits earned in the UK.

 

The Group's cash balance of €3,740 million at September 30, 2013 was up €831 million from December 31, 2012. The cash balance at September 30, 2013 comprised €2,202 million held by British Airways, €689 million held by Iberia, €591 held by Vueling and €258 million held by IAG. Included in the Group's cash balance are funds of €140 million equivalent which have been recognised by Venezuela's Central Bank, but not yet repatriated. This is common practice for airlines operating in Venezuela. Between February 2013 and September 2013 the time taken to repatriate cash has risen from five months to nine months.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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