IAG terminates sale and purchase agreement for Air Europa, group’s operating profit 1,309m. euros in HI 2023

International Airlines Group (“IAG”) announces its decision to terminate the agreement with Globalia signed on 23 February 2023, pursuant to which IAG agreed to acquire from Globalia the remaining 80 per cent of issued share capital of Air Europa. The Board of Directors has concluded that in the current regulatory environment it would not be in the best interests of shareholders to continue with the transaction.

In accordance with the terms of the Agreement, IAG will pay Globalia 50 million euros as a break fee as a result of the termination.

IAG continues to hold its 20 per cent minority equity stake in Air Europa which it acquired on 16 August 2022.

Luis Gallego, IAG’s chief executive, said: “We believe this decision is in the best interests of our shareholders. IAG remains committed to its strategy, including competing effectively from its Madrid hub. This is a strategy which is delivering strong results. We will continue to develop our presence in Madrid so that the hub can develop as a rival to Europe’s largest hub airports.’’

Strong first half performance

Highlights

Strong performance for H1 2024: operating profit of 1,309 million euros, 49 million euros ahead of H1 2023
Q2 operating profit of 1,241 million euros – broadly in line with a record Q2 2023 (1,251 million euros)
Continuing robust demand for travel in airline’s markets supports positive unit revenue growth
Transformation programme helping to deliver strong margins and profit in the medium term
Focused growth in our core markets
Making good progress with operational and customer initiatives at British Airways
Continuing good operational and financial performance in Spain
Further growth in IAG’s capital-light IAG Loyalty business; now including BA Holidays
Significant increase in H1 free cash flow to 3.2 billion euros
Strong balance sheet: 1.1x leverage; Investment grade at S&P and Moody’s; refinanced Revolving Credit Facility
Withdrawal from the Air Europa transaction in the best interests of the  shareholders
With confidence in the strategy and business model the Board has approved a 3 cents per share interim dividend
Airline remain committed to disciplined capital allocation and distributing excess cash to shareholders

Luis Gallego said: “We see continuing strong demand for travel in the attractive core markets in which we operate: North Atlantic, Latin America and intra-Europe. We delivered a good performance in the first half of 2024, with operating profit 49 million euros ahead of the same period last year. We are pleased to announce a return to paying a dividend, which reflects our confidence in the business, our performance and our transformation. We are delivering on our strategy and our commitment to sustainable shareholder returns. We would like to thank our people working across the Group for their contribution to these positive results.”

Outlook for 2024

Strong demand for travel, particularly in our core markets of the North Atlantic, Latin America and intra-Europe
Φull year capacity (ASK) growth guidance remains the same at 7%; Q3 2024 to be c.+7%
Νon-fuel unit cost is also as previously guided: to increase slightly overall in 2024
Expect to generate significant free cash flow and maintain a strong balance sheet

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