IAG(US:ICAGY)2024-02-29 21:03Financial Performance - The company reported a full year operating profit of €3.5 billion, up from €1.2 billion in 2022 and exceeding the €3.3 billion achieved in 2019, with an operating margin of 11.9% [4][16] - Significant free cash flow of €1.3 billion was generated, with net debt reduced to €9.2 billion and a leverage ratio of 1.7x, lower than the previous year [5][16] Business Line Performance - Iberia delivered an operating profit of €940 million, more than doubling from the previous year, with a margin of 13.5% [19] - British Airways' profit increased by over GBP 1.1 billion to GBP 1.4 billion, with a margin of 10% [18] - Aer Lingus improved profits to €225 million with a margin of 10% [17] - Vueling achieved nearly €400 million in operating profit with a margin of 12.4% [19] - IAG Loyalty's profit grew by 70% to GBP 280 million, adding 4.9 million new members [9] Market Performance - Capacity increased by 23% year-on-year, with passenger unit revenue up more than 8% and non-fuel unit costs reduced by 4.4% [15] - North America saw a capacity growth of 23% and PRASK increased by nearly 4% [26] - Latin America and the Caribbean experienced a 19% capacity increase and an 8% rise in PRASK [27] - The Asia Pacific region is recovering, with capacity at around 40% of 2019 levels [28] Company Strategy and Industry Competition - The company is focused on growing its global leadership positions, particularly in the North Atlantic market, where British Airways is the leading carrier [50] - Investment in modernizing the fleet and enhancing customer experience is a priority, with a commitment to sustainability [76][77] - The company plans to maintain a disciplined approach to capital allocation while investing in growth opportunities [46] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in generating significant free cash flow in 2024, with strong demand expected to continue, particularly in leisure travel [6][78] - The company is focused on improving operational performance, particularly at British Airways, with ongoing investments in technology and processes [11][88] - The outlook for 2024 includes a projected ASK growth of around 7% and a slight increase in non-fuel CASK due to investments and inflation [79][80] Other Important Information - The company has made significant progress on its sustainability agenda, reducing carbon intensity by 3.6% year-on-year [76] - A new management team has been appointed, with changes effective from April [83] Q&A Session Summary Question: CapEx phasing and British Airways on-time performance - Management indicated that CapEx is expected to increase towards the end of the year, with improvements in British Airways' punctuality being a focus area [85][87] Question: Madrid-Barajas expansion impact - The company supports the expansion of Madrid-Barajas, emphasizing the need for sustainable and affordable development [90][91] Question: Margins and Heathrow management - Management did not provide specific guidance on margins but indicated a consensus around €3.3 billion for 2024 [93][94] - Support for Heathrow expansion was reiterated, with a focus on improving airport performance regardless of the third runway debate [95][96] Question: Capacity growth flexibility and emissions - Management acknowledged that capacity growth is primarily driven by utilization and load factors, with some opportunities for growth in Iberia [97][99] - Discussions on CORSIA highlighted the need for global alignment and the challenges posed by European mandates [101][102]