IAG presents 2020 results showing operating loss of 7.4 billion euros

Full-year results announcement

International Consolidated Airlines Group (IAG) today (February 26, 2021) presented Group consolidated results for the year to December 31, 2020.

COVID-19 situation and management actions:

• Passenger capacity in quarter 4 was 26.6 per cent of 2019 and for the full year was 33.5 per cent of 2019 and continues to be adversely affected by the COVID-19 pandemic, together with government restrictions and quarantine requirements
• Current passenger capacity plans for quarter 1, 2021 are for around 20 per cent of 2019 capacity, but remain uncertain and subject to review
• 969 cargo-only flights operated in quarter 4
• Additional funding of €3.4 billion secured in quarter 4, including £2.0 billion commitment from UK Export Finance finalised in February 2021 and $1.0 billion EETC for British Airways, $0.2 billion sales and leaseback transactions for Iberia and €150 million for Aer Lingus backed by the Ireland Strategic Investment Fund (ISIF), with €0.8 billion bridge financing facilities repaid
• 2020 capex reduced by €2.3 billion, from plans at the start of the year, to €1.9 billion, with €0.5 billion due to seven aircraft deliveries delayed from Q4-20 into 2021; 2021 capex expected to be lower than 2020
• British Airways reached agreement to defer €495 million of pension contributions due between September 2020 and October 2021
• British Airways reached agreement in principle over restructuring plans for cargo employees, following agreement with the other main British Airways employee groups earlier in 2020
• Group continues to focus on cost reduction, increasing the variability of its cost-base and liquidity initiatives

IAG period highlights on results:

• Fourth-quarter operating loss €1,471 million (2019: operating profit €93 million), and operating loss before exceptional items €1,165 million (2019: operating profit before exceptional items €765 million)
• Operating loss for the year to December 31, 2020, €7,426 million (2019: operating profit €2,613 million), and operating loss before exceptional items €4,365 million (2019: operating profit before exceptional items €3,285 million)
• Exceptional charge before tax in the year to December 31, 2020, of €3,061 million on discontinuance of fuel and foreign exchange hedge accounting, impairment of fleet and restructuring costs; exceptional charge before tax for quarter 4 €306 million
• Loss after tax and exceptional items for the year to December 31, 2020, €6,923 million (2019: profit €1,715 million) and loss after tax before exceptional items: €4,325 million (2019: profit before exceptional items €2,387 million)
• Cash of €5,917 million at December 31, 2020 down €766 million on December 31, 2019. Committed and undrawn general and aircraft facilities were €2.14 billion, bringing total liquidity to €8.1 billion. Including €2.2 billion proceeds from the UK Export Finance (UKEF) gives total pro-forma liquidity of €10.3 billion.

Luis Gallego, IAG’s Chief Executive Officer, said:

“In 2020, we’re reporting an operating loss of €4,365 million before exceptional items compared to an operating profit of €3,285 million in 2019. Total operating losses including exceptional items relating to fuel and currency hedges, early fleet retirement plus restructuring costs came to €7,426 million.

“Our results reflect the serious impact that COVID-19 has had on our business. We have taken effective action to preserve cash, boost liquidity and reduce our cost base. Despite this crisis, our liquidity remains strong. At 31 December, the Group’s liquidity was €10.3 billion including a successful €2.7 billion capital increase and £2 billion loan commitment from UKEF. This is higher than at the start of the pandemic.

“In 2020, our capacity decreased by 66.5 per cent while our non-fuel costs went down 37.1 per cent thanks to the extraordinary effort across our business. The Group continues to reduce its cost base and increase the proportion of variable costs to better match market demand. We’re transforming our business to ensure we emerge in a stronger competitive position.

“IAG Cargo’s turnover increased by almost €200 million to €1.3 billion. Cargo helped to make long-haul passenger flights viable. In addition, we operated 4,003 cargo-only flights in the year.

“I would like to thank our employees across the Group for their remarkable commitment, resilience and flexibility through this crisis. They have adapted quickly to new ways of working and made big sacrifices in terms of salary and working time. Our people have played a central role in all we have achieved during these challenging times.

“The aviation industry stands with governments in putting public health at the top of the agenda. Getting people travelling again will require a clear roadmap for unwinding current restrictions when the time is right.

“We know there is pent-up demand for travel and people want to fly. Vaccinations are progressing well and global infections are going in the right direction. We’re calling for international common testing standards and the introduction of digital health passes to reopen our skies safely.”