Strong growth in air travel and freight.27 May 2022 14:14
My target stands at £2.2 by end of 2022 and £3 by 2024.
In 2021, International Consolidated Airlines Group (IAG), had total revenue of €8.5bn, up 8% YoY, including passenger revenue of €5.8bn, up 6% YoY, and an operating loss before exceptional items of €3.0bn (compared to the loss of €4.3bn in FY 20). In FY 21, IAG had negative EBITDA before exceptional items of €1.0bn but managed to achieve a positive EBITDA of €0.25bn in 4Q of the year for the first time since the start of the pandemic.
The company had negative free cash flow of €0.3bn in FY21, but with the very low level of gross capex of €0.7bn, partially offset by the asset disposals of €0.5bn. IAG's net cash from operating activities for the year was negative €0.1bn, helped by the substantial positive operating cash flow of €1.0bn in 2H 21. At YE '21, IAG had liquidity of €12.0bn.
In 1Q '22, the company expects capacity to be around 65% of the 2019 levels, with the quarter expected to be loss-making at the operating profit level due to the impact of the Omicron variant, operating costs of restoring capacity and due to the normal annual seasonality. IAG noted that bookings have been strengthening for the Easter and summer periods, with the capacity in 3Q '22 expected to be at approximately 90% of the 2019 levels and planned full restoration of the North Atlantic routes for that quarter.
For FY '22, the company expects to be close to 85% of the 2019 levels and for operating profits to be positive from 2Q onwards and significantly positive for the full year of 2022. IAG guides for net cash flows from operating activities to also be "significantly positive" for FY '22.
Of note is a significant increase in the gross capex budget in FY22, to €3.9bn (compared to just €0.7bn in FY 21), driven by the need to restore the capacity to the pre-pandemic levels and due to the delay in the delivery of aircraft and deferred pre-delivery payments from 2021.
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