International Consolidated Airlines S A : Interim Management Report for the six months to June 30, 2021

SIX MONTHS RESULTS ANNOUNCEMENT

International Consolidated Airlines Group (IAG) today (July 30, 2021) presents Group consolidated results for the six months to June 30, 2021.

COVID-19 situation and management actions:

• Passenger capacity in quarter 2 was 21.9 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 3 are for around 45 per cent of 2019 capacity, but remain uncertain and subject to ongoing review
• 1,371 cargo-only flights operated in quarter 2, up from 1,306 in quarter 1
• Strong liquidity of €10.2 billion at the end of quarter 2, driven by successful conclusion of financing initiatives since the start of the year, together with cost actions and UK pension contribution deferral. These initiatives included:
• • Drawdown of previously committed borrowing for British Airways (£2.0 billion UK Export Finance) and Aer Lingus (remaining €75 million drawn against Ireland Strategic Investment Fund facility)
  • €1.2 billion of IAG Senior Unsecured Bonds issued, with issue oversubscribed
  • €825 million of IAG Convertible Bonds issued, also oversubscribed
  • New 3-year $1.755 billion committed, secured revolving credit facility concluded for Aer Lingus, British Airways and Iberia and which remains undrawn; simultaneous cancellation of British Airways' previous revolving credit facility scheduled to mature in June 2021 (value at December 31, 2020: $0.8 billion undrawn)
  • Agreement for British Airways to defer monthly pension deficit contributions totalling £450 million between October 2020 and September 2021
  • Cash operating costs for quarter 2 of €190 million per week
• Sustainability-linkedEETC financing executed in July for British Airways' remaining fleet deliveries for 2021, with total financing to be drawn of $785 million

IAG period highlights on results:

• Reported operating loss for the second quarter €967 million (2020 restated: operating loss €2,182 million) and operating
  loss before exceptional items €1,045 million (2020 restated: operating loss before exceptional items €1,370 million)
• Reported operating loss for the half year €2,035 million (2020 restated: operating loss €4,052 million), and operating loss
  before exceptional items €2,180 million (2020 restated: operating loss before exceptional items €1,915 million)
• Exceptional credit before tax in the half year of €145 million on discontinuance of fuel and foreign exchange hedge accounting (2020: exceptional charge before tax of €2,137 million on discontinuance of fuel and foreign exchange hedge accounting and impairment of fleet)
• Loss after tax and exceptional items for the half year €2,048 million (2020 restated: loss €3,813 million) and loss after tax
  before exceptional items: €2,169 million (2020 restated: loss €1,972 million)
• Cash of €7.7 billion at June 30, 2021 up €1.7 billion on December 31, 2020. Committed and undrawn general and aircraft facilities of €2.5 billion, bringing total liquidity to €10.2 billion, with pro forma liquidity including the British Airways sustainability-linked EETC financing executed in July at €10.8 billion

Performance summary:		Six months to June 30
			2020	Higher /
Reported results (€ million)		2021	restated1	(lower)
Passenger revenue	1,141	4,113	(72.3)%
Total revenue	2,212	5,288	(58.2)%
Operating loss	(2,035)	(4,052)	(49.8)%
Loss after tax	(2,048)	(3,813)	(46.3)%
Basic loss per share (€ cents)2	(41.2)	(124.7)	(67.0)%
Cash and interest-bearing deposits3	7,664	5,917	29.5 %
Borrowings3	19,771	15,679	26.1 %
			2020	Higher /
Alternative performance measures (€ million)		2021	restated1	(lower)
Passenger revenue before exceptional items	1,136	4,151	(72.6)%
Total revenue before exceptional items	2,207	5,326	(58.6)%
Operating loss before exceptional items	(2,180)	(1,915)	13.8 %
Loss after tax before exceptional items	(2,169)	(1,972)	10.0 %
Adjusted loss per share (€ cents)2	(43.7)	(64.5)	(32.2)%
Net debt3	12,107	9,762	24.0 %
Available seat kilometres (ASK million)	34,041	71,625	(52.5)%
Passenger revenue per ASK (€ cents)	3.34	5.80	(42.4)%
Non-fuel costs per ASK (€ cents)	11.02	8.28	(33.1)%

For definitions refer to the IAG Annual report and accounts 2020. Cash comprises cash, cash equivalents and interest-bearing deposits.

1The 2020 results have been restated for the treatment of administration costs associated with the Group's defined benefit pension schemes. Further information is given in note 1 to this report.

2The loss per share information for the six months to June 30, 2020, has been restated to reflect the impact of the rights issue in October 2020.

3The prior year comparative is December 31, 2020.

Luis Gallego, IAG Chief Executive Officer, said:

"In the short term, our focus is on ensuring our operational readiness, so we have the flexibility to capitalise on an environment where there's evidence of widespread pent-up demand when travel restrictions are lifted.

"This is reflected in Iberia's and Vueling's results. They were the best performers within the group in the second quarter reflecting stronger Latin American and Spanish domestic markets driven by fewer travel restrictions. We know that recovery will be uneven, but we're ready to take advantage of a surge in air travel demand in line with increasing vaccination rates.

"We welcome the recent announcement that fully vaccinated travellers from amber countries in the EU and the US will no longer have to quarantine upon arrival in the UK. We see this as an important first step in fully re-opening the transatlantic travel corridor.

"All our airlines continue to take significant actions to preserve their strength through the current pandemic and to position them for recovery. We continue to build resilience by preserving cash, boosting liquidity and reducing our cost base. At 30 June, the Group's liquidity was €10.2 billion with a significant improvement in operating cash flow compared to previous quarters.

"Longer term we're preparing our business so that we can emerge stronger and more competitive in a structurally changed industry. For example, we're accelerating the digitalisation of our business and our agreements with unions are enabling us to improve productivity and reduce our cost base while increasing the proportion of variable costs.

"We remain resolute in our climate commitments. Recently, British Airways successfully raised $785 million through an EETC financing linked to the airline's sustainability targets. We have also been upgraded by the CDP (Carbon Disclosure Project) to A- in recognition of our comprehensive carbon management strategy. IAG is the only European airline group that has been awarded this high grade."

Trading outlook

Given the uncertainty over the timing of the lifting of government travel restrictions and the continued impact and duration of COVID-19, IAG is not providing profit guidance for 2021.

LEI: 959800TZHQRUSH1ESL13

This announcement contains inside information and is disclosed in accordance with the Company's obligations under the Market Abuse Regulation (EU) No 596/2014.

Steve Gunning, Chief Financial Officer

Forward-looking statements:

Certain statements included in this announcement are forward-looking. These statements can be identified by the fact that they do not relate only to historical or current facts. By their nature, they involve risk and uncertainties because they relate to events and depend on circumstances that will occur in the future. Actual results could differ materially from those expressed or implied by such forward-looking statements.

Forward-looking statements often use words such as "expects", "may", "will", "could", "should", "intends", "plans", "predicts", "envisages" or "anticipates" or other words of similar meaning. They include, without limitation, any and all projections relating to the results of operations and financial conditions of International Consolidated Airlines Group, S.A. and its subsidiary undertakings from time to time (the 'Group'), as well as plans and objectives for future operations, expected future revenues, financing plans, expected expenditure and divestments relating to the Group and discussions of the Group's business plan. All forward-looking statements in this announcement are based upon information known to the Group on the date of this announcement and speak as of the date of this announcement. Other than in accordance with its legal or regulatory obligations, the Group does not undertake to update or revise any forward-looking statement to reflect any changes in events, conditions or circumstances on which any such statement is based.

Actual results may differ from those expressed or implied in the forward-looking statements in this announcement as a result of any number of known and unknown risks, uncertainties and other factors, including, but not limited to, the effects of the COVID-19 pandemic and uncertainties about its impact and duration, many of which are difficult to predict and are generally beyond the control of the Group, and it is not reasonably possible to itemise each item. Accordingly, readers of this announcement are cautioned against relying on forward-looking statements. Further information on the primary risks of the business and the Group's risk management process is set out in the Risk management and principal risk factors section in the Annual Report and Accounts 2020; these documents are available on www.iairgroup.com. All forward-looking statements made on or after the date of this announcement and attributable to IAG are expressly qualified in their entirety by the primary risks set out in that section. Many of these risks are, and will be, exacerbated by the COVID-19 pandemic and any further disruption to the global airline industry and economic environment as a result.

IAG Investor Relations

Waterside (HAA2),

PO Box 365,

Harmondsworth,

Middlesex,

UB7 0GB

Tel: [phone]

[e-mail]

2

CONSOLIDATED INCOME STATEMENT

			Six months to June 30
					Higher/
€ million		2021	20201		(lower)
Passenger revenue	1,141	4,113	(72.3)%
Cargo revenue	769	615	25.0 %
Other revenue	302	560	(46.1)%
Total revenue	2,212	5,288	(58.2)%
Employee costs	1,288	1,905	(32.4)%
Fuel, oil costs and emissions charges	497	2,582	(80.8)%
Handling, catering and other operating costs	367	853	(57.0)%
Landing fees and en-route charges	287	539	(46.8)%
Engineering and other aircraft costs	419	843	(50.3)%
Property, IT and other costs	353	428	(17.5)%
Selling costs	159	268	(40.7)%
Depreciation, amortisation and impairment	920	1,845	(50.1)%
Currency differences	(43)	77		nm
Total expenditure on operations	4,247	9,340	(54.5)%
Operating loss	(2,035)	(4,052)	(49.8)%
Finance costs	(363)	(342)	6.1 %
Finance income	4	23	(82.6)%
Net financing credit relating to pensions	1	9	(88.9)%
Net currency retranslation credits	(13)	97		nm
Other non-operating credits	70	50	40.0 %
Total net non-operating costs	(301)	(163)	84.7 %
Loss before tax	(2,336)	(4,215)	(44.6)%
Tax	288	402	(28.4)%
Loss after tax for the period	(2,048)	(3,813)	(46.3)%

Three months to June 30

Higher/

2021 20201 (lower)

682 160 nm

419 369 13.6 %

143	174	(17.8)%
1,244	703	77.0 %
666	661	0.8 %
271	48	nm
194	201	(3.5)%

160 88 81.8 %

212	339	(37.5)%
169	203	(16.7)%

89 57 56.1 %

450	1,275	(64.7)%
-	13	nm
2,211	2,885	(23.4)%
(967)	(2,182)	(55.7)%
(186)	(191)	(2.6)%
1	12	(91.7)%
2	5	(60.0)%
-	20	nm
30	10	nm

1. (144) 6.3 %
   (1,120) (2,326) (51.8)%

139	201	(30.8)%
(981)	(2,125)	(53.8)%

1The 2020 results have been restated for the treatment of administration costs associated with the Group's defined benefit pension schemes. Further information is given in note 1 to this report.

3

ALTERNATIVE PERFORMANCE MEASURES

All figures in the tables below are before exceptional items. Refer to Alternative performance measures section for more detail.

			Six months to June 30
		Before exceptional items
				Higher/
	€ million	2021	20201	(lower)2
	Passenger revenue	1,136	4,151	(72.6)%
	Cargo revenue	769	615	25.0 %
	Other revenue	302	560	(46.1)%
	Total revenue before exceptional items	2,207	5,326	(58.6)%
	Employee costs	1,288	1,905	(32.4)%
	Fuel, oil costs and emissions charges	637	1,313	(51.5)%
	Handling, catering and other operating costs	367	853	(57.0)%
	Landing fees and en-route charges	287	539	(46.8)%
	Engineering and other aircraft costs	419	766	(45.3)%
	Property, IT and other costs	353	406	(13.1)%
	Selling costs	159	268	(40.7)%
	Depreciation, amortisation and impairment	920	1,114	(17.4)%
	Currency differences	(43)	77	nm
	Total expenditure on operations before exceptional	4,387	7,241	(39.4)%
	items

Three months to June 30

Before exceptional items

Higher/

2021 20201 (lower)2

682 198 nm

419 369 13.6 %

143	174	(17.8)%
1,244	741	67.9 %

666 661 0.8 %

349	104	nm
194	201	(3.5)%

160 88 81.8 %

212	262	(19.1)%
169	181	(6.6)%

89 57 56.1 %

450	544	(17.3)%
-	13	nm
2,289	2,111	8.4 %

Operating loss before exceptional items	(2,180)	(1,915)	13.8 %
Finance costs	(363)	(342)	6.1 %
Finance income	4	23	(82.6)%
Net financing credit relating to pensions	1	9	(88.9)%
Net currency retranslation (charges)/credits	(13)	97	nm
Other non-operating credits	70	50	40.0 %
Total net non-operating costs	(301)	(163)	84.7 %
Loss before tax before exceptional items	(2,481)	(2,078)	19.4 %
Tax	312	106	nm
Loss after tax for the period before exceptional items	(2,169)	(1,972)	10.0 %
			Higher/
Operating figures	20212	20202	(lower)
Available seat kilometres (ASK million)	34,041	71,625	(52.5)%
Revenue passenger kilometres (RPK million)	16,748	52,772	(68.3)%
Seat factor (per cent)	49.2	73.7	(24.5)pts
Passenger numbers (thousands)	8,080	20,385	(60.4)%
Cargo tonne kilometres (CTK million)	1,853	1,751	5.8 %
Sold cargo tonnes (thousands)	248	232	7.0 %
Sectors	77,956	155,265	(49.8)%
Block hours (hours)	260,094	492,515	(47.2)%
Average manpower equivalent3	50,813	63,501	(20.0)%
Aircraft in service	529	548	(3.5)%
Passenger revenue per RPK (€ cents)	6.78	7.87	(13.8)%
Passenger revenue per ASK (€ cents)	3.34	5.80	(42.4)%
Cargo revenue per CTK (€ cents)	41.50	35.12	18.2 %
Fuel cost per ASK (€ cents)	1.87	1.83	2.0 %
Non-fuel costs per ASK (€ cents)1	11.02	8.28	33.1 %
Total cost per ASK (€ cents)1	12.89	10.11	27.5 %

(1,045)	(1,370)	(23.7)%
(186)	(191)	(2.6)%
1	12	(91.7)%
2	5	(60.0)%
-	20	nm
30	10	nm

1. (144) 6.3 %
   (1,198) (1,514) (20.9)%

153 103 48.5 %

(1,045) (1,411) (25.9)%

		Higher/
20212	20202	(lower)
19,245	4,103	nm
9,969	1,155	nm
51.8	28.2	23.6pts
5,468	508	nm

999 578 72.8 %

131 84 55.8 %

50,256	11,296	nm
151,186	58,271	nm
50,692	63,532	(20.2)%
n/a	n/a	-
6.84	17.14	(60.1)%
3.54	4.83	(26.6)%
41.94	63.84	(34.3)%
1.81	2.53	(28.6)%
10.08	48.92	(79.4)%
11.89	51.45	(76.9)%

1. The 2020 results have been restated for the treatment of administration costs associated with the Group's defined benefit pension schemes. Further information is given in note 1 to this report.
2. Financial ratios are before exceptional items. Refer to Alternative performance measures section for detail.
3. Included in the average manpower equivalent are staff on furlough, wage support and equivalent schemes, including the Temporary Redundancy Plan arrangements in Spain.

4

FINANCIAL REVIEW

COVID-19 Summary - Six months to June 30, 2021

The Group's results continue to be impacted by COVID-19 and the related restrictions on travel. A detailed review of the impact of COVID-19 on the Group in 2020 was provided in the 2020 Annual Report and Accounts and this review provides an update for the first six months of 2021.

In the first half of 2021, due to the continuing impact of the virus worldwide and the associated travel and border restrictions applying in many countries, the Group was only able to operate a limited passenger schedule, with capacity operated only

20.8 per cent of that operated in 2019. Passenger capacity for quarter 2 was 21.9 per cent of 2019, up marginally on the 19.6 per cent operated in quarter 1, with an increase in capacity during the quarter where travel restrictions allowed. The Group operated 2,677 additional cargo-only flights, leading to record cargo revenue for the six months.

The Group seeks to reduce the impact of volatile commodity prices by hedging fuel purchases in advance, based on expected capacity levels. The Group also hedges foreign exchange rates. The impact of COVID-19 has led to a significant reduction in the requirement to purchase jet fuel, due to the significantly reduced flying programme. As a consequence, the Group has derivative contracts for which there was no corresponding purchase of jet fuel, leading to discontinuance of hedge accounting for these fuel derivatives, together with the related foreign exchange derivatives. In aggregate there is a net loss on these derivative contracts as, whilst the commodity fuel price has risen in recent months, the average fuel price over the period covered by these contracts was significantly below levels seen before COVID-19, when these derivative contracts were taken out. The exceptional credit in the six months is mainly due to reduced losses on these contracts, due to rising fuel prices in 2021, net of an adjustment for the latest assessment of capacity for 2021 and foreign exchange movements.

In May 2021, the Board approved a revised fuel hedging policy, which is designed to provide flexibility to respond to both significant unexpected reductions in travel demand or capacity and/or material or sudden changes in jet fuel prices. The revised policy allows for differentiation within the Group, to match the nature of each operating company, including greater use of call options. The revised policy will operate on a two-year rolling basis, with hedging up to 60 per cent of anticipated requirements in the first twelve months and up to 30 per cent in the following twelve months and with flexibility for low cost airlines within the Group to adopt hedging up to 75 per cent in the first twelve months. For all Group airlines, hedging between 25 and 36 months ahead will only be undertaken in exceptional circumstances.

The Group continues to take action to preserve cash and boost liquidity. In the six months the Group drew down on debt facilities agreed in 2020, namely £2.0 billion for British Airways from UK Export Finance and €75 million for Aer Lingus from the Ireland Strategic Investment Fund. IAG closed a dual-tranche senior unsecured bond issuance in March, raising €1.2 billion, with €500 million maturing in 2025 and €700 million maturing in 2029. In May, IAG raised €825 million by issuing a convertible bond, maturing in 2028. During the six months the Group also signed a committed secured Revolving Credit Facility (RCF) with a syndicate of banks for $1.755 billion, available for three years, plus two consecutive one-year extension periods, at the discretion of the lenders. The facility is available to Aer Lingus, British Airways and Iberia, each of whom has a separate borrower limit within the overall facility. Any drawings under the facility would be secured against eligible unencumbered aircraft assets and take-off and landing rights at both London Heathrow and London Gatwick airports. The facility remained undrawn at the end of June. Simultaneous with entering into this new RCF, British Airways cancelled its US dollar revolving credit facility that was due to expire in June 2021 and which had $786 million undrawn and available at December 31, 2020. Approximately €400 million of aircraft financing facilities expired undrawn by the end of March. Subsequent to the end of June, funding of $785 million was secured for British Airways through a sustainability-linked Enhanced Equipment Trust Certificate (EETC ) financing, to be drawn down against future aircraft deliveries. Total liquidity at the end of the six months remained strong at €10.2 billion, including cash, cash equivalents and current interest-bearing deposits of €7.7 billion and committed and undrawn general and aircraft facilities of €2.5 billion. Including the British Airways sustainability-linked EETC financing secured in July increases pro forma liquidity to €10.8 billion.

The Group expects that it will take until at least 2023 for passenger demand to reach the levels of 2019. As a result the Group is actively involved in restructuring its cost base to adjust to significantly lower levels of demand, including actions to reduce fixed costs and to increase the variable proportion of the cost structure.

Basis of preparation

Based on the extensive modelling the Group has undertaken in light of the COVID-19 pandemic, including considering plausible but severe downside scenarios, the Directors have a reasonable expectation that the Group has sufficient liquidity for the going concern assessment period to December 31, 2022 and accordingly the Directors have adopted the going concern basis in preparing the consolidated results for the six months to June 30, 2021.

However, there are a number of significant factors related to COVID-19 that are outside of the control of the Group, related to the status and impact of the pandemic worldwide. These include the emergence of new variants of the virus and potential resurgence of existing strains of the virus; the availability of vaccines worldwide, together with the speed at which they are deployed; the efficacy of those vaccines; and the restrictions imposed by national governments in respect of the freedom of movement and travel. Due to the uncertainty that these factors create, the Directors are not able to provide certainty that there could not be more severe downside scenarios than those that have been considered in the modelling, including the sensitivities the Group has considered in relation to factors such as the impact on yield, capacity operated, cost mitigations achieved and the availability of aircraft financing to offset capital expenditure. In the event that such a scenario were to occur, the Group would need to implement additional mitigation measures and would likely need to secure additional funding over and above that which is contractually committed at July 29, 2021.

The Group has been successful in raising liquidity in the six months to June 30, 2021, having financed all aircraft deliveries in the period, secured an additional €4.4 billion of non-aircraft debt and secured a new $1.755 billion Revolving Credit Facility, committed for three years. On July 20, 2021, the Group further improved liquidity by securing a $785 million aircraft-specific

5