International Consolidated Airlines S A : Interim Management Statement for the three months to March 31, 2021

THREE MONTHS RESULTS ANNOUNCEMENT

International Consolidated Airlines Group (IAG) today (May 7, 2021) presented Group consolidated results for the three months to March 31, 2021.

COVID-19 situation and management actions:

• Passenger capacity in quarter 1 was 19.6 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 2 are for around 25 per cent of 2019 capacity, but remain uncertain and subject to review
• 1,306 cargo-only flights operated in quarter 1, up from 969 in quarter 4, 2020
• Strong liquidity, increased to €10.5 billion at the end of the quarter (from total pro-forma liquidity of €10.3 billion at December 31, 2020), driven by successful conclusion of financing initiatives in the quarter, together with cost actions and UK pension contribution deferral. These included:
• • Drawdown of previously committed borrowing for British Airways (£2.0 billion UK Export Finance) and Aer
    Lingus (€75 million drawn against Ireland Strategic Investment Fund facility)
  • Additional €1.2 billion of IAG Senior Unsecured Bonds issued, with issue heavily oversubscribed
  • New 3-year $1.755 billion committed, secured revolving credit facility concluded for Aer Lingus, British Airways and Iberia and which remains undrawn; cancellation of British Airways' previous revolving credit facility scheduled to mature in June 2021 (value at December 31, 2020: $0.8 billion)
  • Agreement for British Airways to defer monthly pension deficit contributions totalling £450 million between October 2020 and September 2021
  • Cash operating costs for the quarter reduced to €175 million per week

IAG period highlights on results:

• First quarter operating loss €1,068 million (2020: operating loss €1,860 million) and operating loss before exceptional
  items €1,135 million (2020: operating loss before exceptional items €535 million)
• Exceptional credit before tax in the quarter of €67 million on discontinuance of fuel and foreign exchange hedge accounting (2020: exceptional charge before tax of €1,325 million on discontinuance of fuel and foreign exchange hedge accounting)
• Loss after tax and exceptional items for the quarter €1,067 million (2020: loss €1,683 million) and loss after tax before
  exceptional items: €1,124 million (2020: loss €556 million)
• Cash of €8.0 billion at March 31, 2021 up €2.1 billion on December 31, 2020. Committed and undrawn general and aircraft facilities of €2.5 billion, bringing total liquidity to €10.5 billion.

Performance summary:

		Three months to March 31
				Higher /
Reported results (€ million)		2021	2020	(lower)
Passenger revenue	459	3,953	(88.4)%
Total revenue	968	4,585	(78.9)%
Operating loss	(1,068)	(1,860)	(42.6)%
Loss after tax	(1,067)	(1,683)	(36.6)%
Basic loss per share (€ cents)1	(21.5)	(55.1)	(61.0)%
Cash and interest-bearing deposits2	7,975	5,917	34.8 %
Interest-bearing borrowings2	19,539	15,679	24.6 %
				Higher /
Alternative performance measures (€ million)		2021	2020	(lower)
Passenger revenue before exceptional items	454	3,953	(88.5)%
Total revenue before exceptional items	963	4,585	(79.0)%
Operating loss before exceptional items	(1,135)	(535)	nm
Loss after tax before exceptional items	(1,124)	(556)	nm
Adjusted loss per share (€ cents)1	(22.6)	(18.2)	24.2 %
Net debt2	11,564	9,762	18.5 %
Net debt to EBITDA2		nm	nm	nm
Available seat kilometres (ASK million)	14,796	67,522	(78.1)%
Passenger revenue per ASK (€ cents)	3.07	5.85	(47.6)%
Non-fuel costs per ASK (€ cents)	12.23	5.79	nm

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

1The loss per share information for the three months to March 31, 2020 has been restated to reflect the impact of the rights issue. 2The prior year comparative is December 31, 2020.

Luis Gallego, IAG Chief Executive Officer, said:

"In quarter 1, we're reporting an operating loss of €1,135 million before exceptional items compared to an operating loss of €535 million last year.

"We've acted decisively to build resilience by boosting liquidity and reducing our cost base. At March 31, the Group's liquidity increased to €10.5 billion which demonstrates IAG's good access to capital markets.

"Cargo has enabled us to operate a more extensive passenger longhaul network. In addition, we operated 1,306 cargo-only flights and generated €350 million in revenue, a record for quarter 1.

"We're taking all necessary actions to ensure the financial health of our business for the long-term, including last year's successful €2.7 billion capital increase, and remain focused on reducing our cost base and increasing efficiencies.

"Despite the challenges posed by the current pandemic, our focus on the safety of our people and customers remains paramount alongside our climate commitments. Our pledge to powering 10 per cent of our flights with sustainable aviation fuel by 2030 shows that we will not back down from our ambition to lead aviation's efforts to reduce its carbon footprint.

"We're doing everything in our power to emerge in a stronger competitive position. We're absolutely confident that a safe re-start to travel can happen as shown by the scientific data. We're ready to fly, but government action is needed through four key measures:

• Travel corridors without restrictions between countries with successful vaccination rollouts and effective testing such us the UK and the US.
• Affordable, simple and proportionate testing to replace quarantine and costly, multi-layered testing.
• Well-staffedborders using contactless technology including e-gates to ensure a safe, smooth flow of people and frictionless travel.
• Digital passes for testing and vaccination documentation to facilitate international travel.

"These measures will enable a safe re-opening of our skies. Travel underpins a global industry that supports 13 million jobs in Europe alone. There's a high level of pent-up demand and aviation will play a critical role in reconnecting people and getting economies back up and running again."

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.

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]

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CONSOLIDATED INCOME STATEMENT

		Three months to March 31
				Higher/
€ million		2021	2020	(lower)
Passenger revenue	459	3,953	(88.4)%
Cargo revenue	350	246	42.3 %
Other revenue	159	386	(58.8)%
Total revenue	968	4,585	(78.9)%
Employee costs	622	1,234	(49.6)%
Fuel, oil costs and emissions charges	226	2,534	(91.1)%
Handling, catering and other operating costs	173	652	(73.5)%
Landing fees and en-route charges	127	451	(71.8)%
Engineering and other aircraft costs	207	504	(58.9)%
Property, IT and other costs	184	225	(18.2)%
Selling costs	70	211	(66.8)%
Depreciation, amortisation and impairment	470	570	(17.5)%
Currency differences	(43)	64	nm
Total expenditure on operations	2,036	6,445	(68.4)%
Operating loss	(1,068)	(1,860)	(42.6)%
Finance costs	(177)	(151)	17.2 %
Finance income	3	11	(72.7)%
Net financing (charge)/credit relating to pensions	(1)	1	nm
Net currency retranslation (charges)/credits	(13)	77	nm
Other non-operating credits	40	40	-
Total net non-operating costs	(148)	(22)	nm
Loss before tax	(1,216)	(1,882)	(35.4)%
Tax	149	199	(25.1)%
Loss after tax for the period	(1,067)	(1,683)	(36.6)%

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ALTERNATIVE PERFORMANCE MEASURES

All figures in the tables below are before exceptional items.

			Three months to March 31
			Before exceptional items
						Higher/
	€ million		2021	2020		(lower)1
	Passenger revenue	454	3,953	(88.5)%
	Cargo revenue	350	246		42.3 %
	Other revenue	159	386		(58.8)%
	Total revenue before exceptional items	963	4,585	(79.0)%
	Employee costs	622	1,234	(49.6)%
	Fuel, oil costs and emissions charges	288	1,209	(76.2)%
	Handling, catering and other operating costs	173	652		(73.5)%
	Landing fees and en-route charges	127	451		(71.8)%
	Engineering and other aircraft costs	207	504		(58.9)%
	Property, IT and other costs	184	225		(18.2)%
	Selling costs	70	211		(66.8)%
	Depreciation, amortisation and impairment	470	570		(17.5)%
	Currency differences	(43)	64		nm
	Total expenditure on operations before	2,098	5,120	(59.0)%
	exceptional items
	Operating loss before exceptional items	(1,135)	(535)	nm
	Finance costs	(177)	(151)	17.2 %
	Finance income	3	11		(72.7)%
	Net financing (charge)/credit relating to	(1)	1		nm
	pensions
	Net currency retranslation (charges)/credits	(13)	77		nm
	Other non-operating credits	40	40		-
	Total net non-operating costs	(148)	(22)	nm
	Loss before tax before exceptional items	(1,283)	(557)	nm
	Tax	159	1		nm
	Loss after tax for the period before exceptional	(1,124)	(556)	nm
	items
						Higher/
	Operating figures		20211	20201		(lower)
	Available seat kilometres (ASK million)	14,796	67,522		(78.1)%
	Revenue passenger kilometres (RPK million)	6,779	51,617		(86.9)%
	Seat factor (per cent)	45.8	76.4		(30.6)pts
	Passenger numbers (thousands)	2,612	19,877		(86.9)%
	Cargo tonne kilometres (CTK million)	854	1,173	(27.2)%
	Sold cargo tonnes (thousands)	117	148		(20.9)%
	Sectors	27,700	143,969		(80.8)%
	Block hours (hours)	108,908	434,244		(74.9)%
	Average manpower equivalent2	50,934	64,365		(20.9)%
	Aircraft in service	531	595		(10.8)%
	Passenger revenue per RPK (€ cents)	6.70	7.66		(12.6)%
	Passenger revenue per ASK (€ cents)	3.07	5.85		(47.6)%
	Cargo revenue per CTK (€ cents)	40.98	20.97	95.4 %
	Fuel cost per ASK (€ cents)	1.95	1.79		8.7 %
	Non-fuel costs per ASK (€ cents)	12.23	5.79		nm
	Total cost per ASK (€ cents)	14.18	7.58		87.0 %

1. Financial ratios are before exceptional items.
2. Included in the average manpower equivalent are staff on furlough, wage support and equivalent schemes, including the Temporary Redundancy Plan arrangements in Spain.

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ALTERNATIVE PERFORMANCE MEASURES continued

Loss after tax before exceptional items

Exceptional items are those that in management's view need to be separately disclosed by virtue of their size or incidence in understanding the entity's financial performance. The exceptional items include significant discontinuance of hedge accounting.

The table below reconciles the reported income statement to the alternative performance measures statement above:

			Three months to March 31
			Before			Before
	Reported	Exceptional	exceptional	Reported	Exceptional	exceptional
€ million	2021	items	items 2021	2020	items	items 2020
Passenger revenue1	459	5	454	3,953		3,953
Cargo revenue	350		350	246		246
Other revenue	159		159	386		386
Total revenue	968	5	963	4,585		4,585
Employee costs	622		622	1,234		1,234
Fuel, oil costs and emissions charges1	226	(62)	288	2,534	1,325	1,209
Handling, catering and other operating costs	173		173	652		652
Landing fees and en-route charges	127		127	451		451
Engineering and other aircraft costs	207		207	504		504
Property, IT and other costs	184		184	225		225
Selling costs	70		70	211		211
Depreciation, amortisation and impairment	470		470	570		570
Currency differences	(43)		(43)	64		64
Total expenditure on operations	2,036	(62)	2,098	6,445	1,325	5,120
Operating loss	(1,068)	67	(1,135)	(1,860)	(1,325)	(535)
Finance costs	(177)		(177)	(151)		(151)
Finance income	3		3	11		11
Net financing (charge)/credit relating to
pensions	(1)		(1)	1		1
Net currency retranslation (charges)/credits	(13)		(13)	77		77
Other non-operating credits	40		40	40		40
Total net non-operating costs	(148)		(148)	(22)		(22)
Loss before tax	(1,216)	67	(1,283)	(1,882)	(1,325)	(557)
Tax	149	(10)	159	199	198	1
Loss after tax for the period	(1,067)	57	(1,124)	(1,683)	(1,127)	(556)

1 Discontinuation of hedge accounting

The exceptional credit to Fuel, oil costs and emissions charges of €62 million (three months to March 31, 2020: charge of

€1,325 million) is represented by a credit of €61 million (three months to March 31, 2020: charge of €1,350 million) relating

to fuel derivatives and a credit of €1 million (three months to March 31, 2020: credit of €25 million) related to the associated fuel foreign currency derivatives, and the exceptional credit to Passenger revenue of €5 million (three months to March 31, 2020: €nil) relates to the derecognition of hedge accounting of the associated fuel derivatives and the foreign currency derivatives on forecast revenue and fuel consumption. These amounts have arisen from the substantial deterioration in demand for air travel caused by COVID-19, which has caused a significant level of hedged fuel purchases in US dollars and hedged passenger revenue transactions in a variety of foreign currencies to no longer be expected to occur, based on the Group's operating forecasts prevailing at the balance sheet date. The Group's risk management strategy has been to build up these hedges gradually over a three-year period when the level of forecast fuel consumption and passenger revenues were higher than current expectations. Accordingly, the hedge accounting for these transactions has been derecognised and the credits recognised in the Income statement. The credit relating to revenue derivatives and fuel derivatives has been recorded in the Income statement within Passenger revenue and Fuel, oil and emission charges, respectively.

The related tax charge was €10 million (three months to March 31, 2020: credit of €198 million).

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