International Consolidated Airlines Group. S.A.

Investor Presentation • May 7, 2020

IAG results presentation

Quarter One 2020

7 May 2020

Highlights

Willie Walsh, Chief Executive Officer

Substantial loss from March due to COVID-19

Highlights and outlook

• Unusual quarterly pre-exceptional operating loss of €535m compared to a profit of €135m last year
  • The first two months were slightly loss-making but similar to last year despite the suspension of flights to China from the end of January due to COVID
  • All of the reduction in the operating result occurred in March following further government imposed travel
  • Most of the reduction in the operating result was incurred by British Airways, followed by Iberia and Aer Lingus, while Vueling experienced a modest increase in its operating loss
  • Exceptional loss of €1.3bn on fuel and foreign currency hedges due to a significant reduction in expected capacity for the rest of 2020 and a sharp decline in jet fuel prices
• Total liquidity position of €10.0bn as of 30 April cash of €6.4bn and undrawn facilities of €3.6bn, with additional facilities under negotiation
• Actions have already been taken to preserve cash
  • Weekly cash operating costs reduced to €200m from €440m
  • 2020 €1.2bn capital spending reduction and fleet deliveries expected to be reduced by 68 between 2020 and 2022
  • IAG announced on 2 April the cancellation of its proposed final dividend for 2019 of €337m
• Highly uncertain outlook
  • Passenger capacity reduction in terms of ASKs of 94% in April and May with flights only undertaken for essential travel, repatriation and cargo
  • Demand for cargo is strong but a small offset to the reduction in passenger activity
  • Passenger capacity from June depends on the timing of the easing of lockdowns and travel restrictions by governments around the world
  • A substantially worse operating loss is therefore expected for the second quarter compared to the first quarter but accurate guidance is not possible
  • Our current planning scenario is for a reduction of passenger capacity of c50% in 2020
• We do not expect the level of passenger demand in 2019 to recover before 2023, making further Group-wide restructuring measures essential

Financial results and update

Steve Gunning, Chief Financial Officer

Significant loss due to sudden revenue decline

1Q 2020 financial summary

'Translation' = drag/benefit from translation of British Airways and Avios financial results from GBP into EUR; 'Transaction' = FX headwind/tailwind at company level See definition of airline non-fuel unit costs in appendices.

The 2019 results have been restated to reclassify the costs the Group incurs in relation to compensation for flight delays and cancellations as a deduction from revenue as opposed to an operating expense. There is no change in operating profit.

Exceptional fuel charge due to 'over-hedging'

1Q 2020 fuel cost

• There have been two consequences as a result of the COVID-19 crisis
  • Price jet fuel prices have fallen sharply since the start of the year from c.\$650/mt to well below \$200/mt
  • Volume passenger capacity has been reduced significantly below the level of fuel and foreign currency hedging, resulting in substantial 'over-hedging' (minimal in Q1)
• As a result, there have been two impacts on the Income Statement in 1Q 2020
  • An ordinary fuel cost of €1,209m relating to fuel consumed and the effective fuel price after hedging
  • An exceptional operating charge of €1,325m relating to the over-hedging expected in 2020 based on forward jet fuel prices and foreign currency rates as of the end of March based on the current capacity planning scenario
• Full year 2020 fuel bill, based on our current planning scenario, would include the following two impacts
  • An ordinary fuel cost of c.€2.9bn relating to fuel consumed and the effective fuel price after hedging
• An exceptional charge for the 'over-hedging' of fuel and related foreign currency of c.€1.5bn, based on the jet fuel prices and currency rates as of 1 May

Going into the crisis our balance sheet and cash liquidity were strong

Leverage and cash liquidity

€m	March 2020	December 2019
Gross debt	14,453	14,254
Cash, cash equivalents & interest-bearing deposits	6,945	6,683
On balance sheet net debt	7,508	7,571
Net debt / EBITDA	1.6x	1.4x
Cash (% of last 12 months revenues)	28%	26%
Liquidity (% of last 12 months revenues)	38%	34%

Note: liquidity calculation includes cash and cash equivalents, interest bearing deposits and undrawn general and committed aircraft finance facilities

The 2019 results have been restated to reclassify the costs the Group incurs in relation to compensation for flight delays and cancellations as a deduction from revenue as opposed to an operating expense. There is no change in operating profit.

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7

Robust liquidity maintained in the short term

Cash and cash equivalents, interest bearing deposits and undrawn general and committed aircraft finance facilities

Cash operating costs more than halved

Short-term operating cost reduction

Note:

• excludes revenue, working capital, tax, debt amortisation and pension deficit payments
• includes interest cash expense and income
• includes finance lease repayments and operating lease rentals
• includes fuel and FX over-hedge losses as of 31 March
• based on 94% capacity reduction in April and May and c.400+ cargo flights per month

2020 capex reduced by €1.2bn and largely financed

2020 capex plan update

Fleet deliveries expected to be reduced by 68 between 2020 and 2022

2021 and 2022 fleet actions

Outlook

Willie Walsh, Chief Executive Officer

Preparations are underway to return to service

Preparations to return to service

• Most of IAG's 595 aircraft are currently grounded
• Our preference is to operate new generation (e.g. A350/B787) and appropriately-sized aircraft on limited passenger, repatriation and cargo-only flights
• We are planning for a meaningful return to service in July 2020 at the earliest, depending on the easing of lockdowns and travel restrictions around the world
• We will adapt our operating procedures to ensure our customers and our people are properly protected in this new environment
• We are working with the various regulatory bodies and are confident that changes in regulations will enable a safe and organised return to service
• The industry will adapt to new requirements in the same way that it has adapted to developments in security requirements in the past
• At this stage we do not expect the level of passenger demand in 2019 to recover before 2023, making further Groupwide restructuring measures essential

Consultation on restructuring at British Airways

UK labour legislation

• The Job Retention Scheme confirms that redundancies can take place despite the scheme and also says the normal employment laws continue to apply
• The obligation to collectively consult on redundancies arises from the Trade Union (Labour Relations) Consolidation Act 1992
• Trade Union (Labour Relations) Consolidation Act 1992 states that:
• An employer proposing to dismiss as redundant 100 or more employees at one establishment within a period of 90 days or less shall notify the Secretary of State, in writing, of his proposal
  • a) before giving notice to terminate an employee's contract of employment in respect of any of those dismissals, and
  • b) at least 45 days before the first of those dismissals takes effect
• Consultation must be with "appropriate" representatives and start in good time, be genuine and meaningful and be with a view to reaching an agreement

Current planning scenario c.50% capacity cut in 2020 for all IAG airlines

2020 current capacity planning scenario

As announced on February 28, 2020, given the uncertainty on the impact and duration of COVID-19, IAG is not currently providing profit guidance for 2020. However, as announced on 28th April, the Group expects its operating loss before exceptional items in the second quarter to be significantly worse than in the first quarter, given the substantial decline in passenger capacity and traffic and despite some relief on employee costs from government wage support schemes and various management actions.

IAG will come out of this crisis as a stronger Group

Strategic highlights

• Our business and industry is facing an unprecedented challenge from COVID-19 that will have a long lasting impact
• Going into this crisis our balance sheet and cash liquidity were strong
  • Total liquidity position of €10.0bn as of 30 April cash of €6.4bn and undrawn facilities of €3.6bn
  • There are additional facilities under negotiation
• We have taken numerous actions to deal with this crisis
  • Cash operating costs have more than halved (to €200m from €440m)
  • Capex has been reduced by €1.2bn for 2020 and further capex reductions are being sought
  • Total fleet deliveries expected to be reduced by 68 aircraft between 2020 and 2022
  • 20 leased aircraft will be returned in 2020; flexibility to return up to 96 leased aircraft in 2021 and 2022
  • Accelerated planned retirement of long-haul aircraft; assessing further accelerated retirements
• At this stage we do not expect passenger demand to recover to the level of 2019 before 2023 at the earliest
• This means Group-wide restructuring is essential in order to get through the crisis and preserve an adequate level of liquidity
• We intend to come out of this crisis as a stronger Group

Appendices

All regions negatively impacted

1Q 2020 revenue performance by region

Regional data in the chart represents flown passenger revenue in unit terms at constant currency before transfer payments, Avios redemption and ancillaries

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Increase in unit cost due to the speed of capacity reduction

1Q 2020 unit cost performance

	1Q 2019 reported unit costs (€ cents)	1Q 2020 reported unit costs (€ cents)	% vly	% vly constant currency
Employee	1.60	1.83	+14.5%	+11.4%
Supplier	2.75	3.12	+13.4%	+5.9%
Ownership	0.68	0.84	+23.6%	+19.9%
Non-fuel	5.03	5.79	+15.1%	+9.6%
Fuel	1.81	1.79	-1.1%	-3.9%
TOTAL	6.84	7.58	+10.8%	+6.0%

'Translation' = drag/benefit from translation of British Airways and Avios financial results from GBP into EUR; 'Transaction' = FX headwind/tailwind at company level See definition of airline non-fuel unit costs in appendices.

The 2019 results have been restated to reclassify the costs the Group incurs in relation to compensation for flight delays and cancellations as a deduction from revenue as opposed to an operating expense. There is no change in operating profit.

RoIC impacted by 1Q 2020 performance

IAG capital allocation 1Q 2020

Op. margin: 1Q 2020 (29.6)% Op. margin trend vly -20.2pts Nml. margin: last 4Qs 9.7% RoIC: last 4Qs 16.7% Op. margin: 1Q 2020 (28.4)% Op. margin trend vly -11.0pts Nml. margin: last 4Qs 8.1% RoIC: last 4Qs 11.3% Op. margin: 1Q 2020 (7.5)% Op. margin trend vly -5.5pts Nml. margin: last 4Qs 7.0% RoIC: last 4Qs 11.9% Op. margin: 1Q 2020 (10.6)% Op. margin trend vly -18.2pts Nml. margin: last 4Qs 9.7% RoIC: last 4Qs 10.5% Op. margin: 1Q 2020 (11.7)% Op. margin trend vly -14.2pts Nml. margin: last 4Qs 9.2% RoIC: last 4Qs 11.4%

Nml. Margin: As above, adjusted for inflation, for comparability with Invested Capital Average Invested Capital: Tangible Fleet and ROU Fleet assets NBV (inflation adjusted), Other PPE and Other ROU assets NBV and Software intangible assets NBV.

The 2019 results have been restated to reclassify the costs the Group incurs in relation to compensation for flight delays and cancellations as a deduction from revenue as opposed to an operating expense. There is no change in operating profit.

Traffic and capacity statistics – February 2020 Traffic and capacity statistics – 1Q 2020

Group performance	2020	1Q 2019	yoy
Passengers carried ('000s)	19,877	24,382	-18.5%
Domestic	5,023	5,921	-15.2%
Europe	9,582	12,406	-22.8%
North America	2,072	2,482	-16.5%
Latin America & Caribbean	1,435	1,475	-2.7%
Africa. Middle East & S. Asia	1,342	1,521	-11.8%
Asia Pacific	423	577	-26.7%
Revenue passenger km (m)	51,617	60,878	-15.2%
Domestic	3,899	4,331	-10.0%
Europe	10,431	13,551	-23.0%
North America	13,738	16,550	-17.0%
Latin America & Caribbean	11,821	12,182	-3.0%
Africa. Middle East & S. Asia	7,667	8,719	-12.1%
Asia Pacific	4,061	5,545	-26.8%
Available seat km (m)	67,522	75,423	-10.5%
Domestic	4,775	5,161	-7.5%
Europe	14,045	17,074	-17.7%
North America	19,389	21,428	-9.5%
Latin America & Caribbean	14,080	14,359	-1.9%
Africa. Middle East & S. Asia	9,786	10,699	-8.5%
Asia Pacific	5,447	6,702	-18.7%
Passenger load factor (%)	76.4	80.7	-4.3 pts
Domestic	81.7	83.9	-2.2 pts
Europe	74.3	79.4	-5.1 pts
North America	70.9	77.2	-6.3 pts
Latin America & Caribbean	84.0	84.8	-0.8 pts
Africa. Middle East & S. Asia	78.3	81.5	-3.2 pts
Asia Pacific	74.6	82.7	-8.1 pts
Cargo tonne km (m)	1,173	1,391	-15.7%

Traffic and capacity statistics – 1Q 2020

Performance by airline	2020	1Q 2019	yoy
Passengers carried ('000s)	1,669	2,196	-24.0%
Revenue passenger km (m)	3,338	4,255	-21.6%
Available seat km (m)	5,277	5,804	-9.1%
Passenger load factor (%)	63.3	73.3	-10.0 pts
Cargo tonne km (m)	42	39	7.7%
Passengers carried ('000s)	8,548	10,472	-18.4%
Revenue passenger km (m)	29,119	34,875	-16.5%
Available seat km (m)	39,248	43,833	-10.5%
Passenger load factor (%)	74.2	79.6	-5.4 pts
Cargo tonne km (m)	879	1,062	-17.2%
Passengers carried ('000s)	4,164	4,946	-15.8%
Revenue passenger km (m)	12,124	13,966	-13.2%
Available seat km (m)	14,870	16,425	-9.5%
Passenger load factor (%)	81.5	85.0	-3.5 pts
Cargo tonne km (m)	248	290	-14.5%
Passengers carried ('000s)	439	289	51.9%
Revenue passenger km (m)	2,082	1,527	36.3%
Available seat km (m)	2,322	1,918	21.1%
Passenger load factor (%)	89.7	79.6	+10.1 pts
Cargo tonne km (m)	4	1	300.0%
Passengers carried ('000s)	5,057	6,479	-21.9%
Revenue passenger km (m)	4,954	6,255	-20.8%
Available seat km (m)	5,805	7,443	-22.0%
Passenger load factor (%)	85.3	84.0	+1.3 pts
Cargo tonne km (m)	n/a	n/a	n/a

Disclaimer

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, 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 2019; 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.