International Consolidated Airlines Group. S.A.

Investor Presentation • Feb 26, 2021

IAG results presentation

Full Year 2020 26 February 2021

2020 Highlights

Luis Gallego, Chief Executive Officer

IAG has responded quickly and decisively to the pandemic

Actions to address COVID-19

Health and safety	• Customers and employees health and safety remains our top priority
Passenger demand	• Passenger demand (RPKs) declined by -74.7% for full year 2020 compared to 2019 and by -87.2% from March to December 2020 compared to the same period in 2019
Non-passenger revenue	• 4,003 cargo-only flights Mar-Dec 2020; record year for cargo revenue • MRO and loyalty revenue more resilient than passenger revenue
Operating costs	• Cash operating expenses halved • Pay cuts, wage support, furlough and temporary reductions • Restructuring in British Airways and Aer Lingus, with new contracts • Iberia and Vueling taking advantage of lower cost base and Spain's more beneficial furlough scheme
Working capital	• Reduction in trade receivables • Booking cancellations partly mitigated by vouchers • Deferred supplier payments, treasury settlements and lease payments • £450m BA pension deficit contributions deferred
Fleet and capex	• Temporary grounding and parking of aircraft • Early retirement of aircraft, including British Airways 747-400s and Iberia A340-600s, plus lease returns • Aircraft delivery delays and capex reduced for 2020 and 2021 • Reduction in other capital expenditure; cyber spend retained
Funding	• €10.3bn pro forma liquidity at the end of 2020 • Successful Rights Issue of €2.7bn • All aircraft deliveries financed • €1.4bn access to COVID-19 funding schemes (UK CCFF, Spain ICO and Ireland ISIF) • €2.2bn UKEF loan contracted and being drawn down (£2.0bn)

Significant actions taken to enhance IAG's long-term strategic position

FY 2020 and 1Q 2021 strategic highlights

Customer	• NPS improved by 10.9 points to 36.7 • BA Club World Suite installed on 28 longhaul aircraft as of the end February • Aer Lingus received antitrust approval to join Atlantic Joint Business • Transformational agreement with Amadeus to distribute IAG airlines' content via the New Distribution Capability (NDC) standard
IAG Loyalty	• American Express multi-year agreement renewed with £750m cash advance • New partnerships with Santander (Spain), Sainsbury's/Nectar (UK) and Barclays Premier Banking (UK) • Strong customer growth and engagement with new partnerships in core markets despite COVID-19 • Further new partnerships to be announced in 2021
IAG Tech	• Virtual Hangar 51 programme seeking innovative solutions to 7 challenges, e.g. contactless travel • Over 500 different programmes and product releases delivered (300 targeted at COVID-19) • Maintained our investment in cyber security tools and capabilities
Sustainability	• Safety, Environment and Corporate Responsibility Board Committee created, integrating the responsibilities of the former Safety Committee while adding oversight over sustainability matters • Planning approval for Velocys waste-to-jet fuel plant • LanzaJet investment for sustainable aviation fuels • BA partnership with ZeroAvia to develop hydrogen propulsion
Air Europa	• Negotiated payment reduction and deferral to 2027
Brexit	• Remedial plans implemented and flying rights secured

Financial results

Steve Gunning, Chief Financial Officer

Liquidity remains strong despite substantial loss

FY 2020 financial highlights

Note: The figures relating to the US dollar facilities expiring in December 2021 have been incorporated to better reflect the amount available to the Group at December 31, 2019. 2020 Pro forma total liquidity includes cash, undrawn general and committed aircraft finance facilities and the €2.2bn UKEF loan arranged (£2.0bn)

Continued losses due to COVID-19

Pre exceptional operating results, 4Q 2020 and FY 2020

	4Q 2020	4Q 2019	vly	FY 2020	FY 2019	vly
Passenger revenue	686	5,390	-87.3%	5,574	22,468	-75.2%
Cargo revenue	389	292	+33.2%	1,306	1,117	+16.9%
Other revenue	228	532	-57.1%	988	1,921	-48.6%
Total revenue	1,303	6,214	-79.0%	7,868	25,506	-69.2%
Employee costs	-649	-1,249	-48.0%	-3,247	-4,962	-34.6%
Fuel, oil costs and emissions charges	-358	-1,452	-75.3%	-2,041	-6,021	-66.1%
Handling, catering and other operating costs	-260	-736	-64.7%	-1,340	-2,972	-54.9%
Landing fees and en-route charges	-181	-522	-65.3%	-918	-2,221	-58.7%
Engineering and other aircraft costs	-296	-505	-41.4%	-1,348	-2,092	-35.6%
Property, IT and other costs	-185	-229	-19.2%	-754	-811	-7.0%
Selling costs	-65	-225	-71.1%	-405	-1,038	-61.0%
Depreciation, amortisation and impairment	-480	-557	-13.8%	-2,099	-2,111	-0.6%
Currency differences	6	26	-76.9%	-81	7	nm
Total expenditure on operations	-2,468	-5,449	-54.7%	-12,233	-22,221	-44.9%
Pre exceptional operating result	-1,165	765	nm	-4,365	3,285	nm
ASKs	21,801	82,005	-73.4%	113,195	337,754	-66.5%

Exceptional charge of €3.1bn for full year 2020

Exceptional items, 4Q 2020 and FY 2020

€m	4Q 2020	FY 2020
Passenger revenue	-2	-62	'Over-hedging' charge related to FX
Total revenue	-2	-62
Employee costs	-44	-313	Restructuring costs related to redundancy programmes mainly at British Airways and Aer Lingus
Fuel, oil costs and emissions charges	-95	-1,694	'Over-hedging' charge related to fuel and FX
Engineering and other aircraft costs	-25	-108	Inventory write down and lease return provisions
Property, IT and other costs	-	-28	Principally UK ICO fine
Depreciation, amortisation and impairment	-140	-856	Impairment of fleet and associated assets
Total expenditure on operations	-304	-2,999
Total operating exceptional items	-306	-3,061

Significant losses at all airlines

Financial performance at airline level, FY 2020

	FY 2020 (€m)	vly	FY 2020 (£m)	vly	FY 2020 (€m)	vly	FY 2020 (€m)	vly
Passenger revenue	382	-81.4%	2,894	-75.7%	1,160	-71.4%	569	-76.7%
Cargo revenue	88	+62.5%	890	+25.2%	240	-17.6%	-	-
Other revenue	-	nm	217	-68.0%	859	-34.0%	5	-72.2%
Total revenue	470	-77.9%	4,001	-69.9%	2,259	-60.0%	574	-76.6%
Total costs	-831	-55.1%	-6,328	-44.3%	-3,018	-41.4%	-1,197	-45.9%
Pre exceptional operating result	-361	-637	-2,327	-4,248	-759	-1,256	-623	-863
Pre exceptional operating margin	-76.8%	-89.8pts	-58.2%	-72.7pts	-33.6%	-42.4pts	-108.5%	-118.3pts
Exceptional items	-202	-202	-1,553	-970	-652	-652	-252	-252
Post exceptional operating result	-563	-839	-3,880	-5,218	-1,411	-1,908	-875	-1,114
ASK (m)	8,741	-71.1%	63,725	-65.8%	25,314	-65.5%	12,940	-66.3%
RPK (m)	4,056	-83.6%	39,118	-74.9%	17,757	-72.3%	9,179	-72.5%
Load factor (%)	46.4%	-35.4pts	61.4%	-22.2pts	70.1%	-17.1pts	70.9%	-16.0pts
Sector length (km)	1,981	-2.0%	3,229	+1.5%	2,576	-9.3%	938	-1.5%

Strong cash position at the end of 2020

Liquidity position higher than before the COVID-19 crisis

Note: The figures relating to the US dollar facilities expiring in December 2021 have been incorporated to better reflect the amount available to the Group at December 31, 2019 2020 Pro forma total liquidity includes cash, undrawn general and committed aircraft finance facilities and the €2.2bn UKEF loan draw down (£2.0bn) *Reduction in facilities between Jun and Sep mostly due to non-cash movements

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€2.2bn increase in net debt in full year 2020

Leverage

€m	31 Dec 2020	30 Sep 2020	30 Jun 2020	31 Mar 2020	31 Dec 2019
Gross debt	15,679	16,107	16,479	14,453	14,254
Bank and other loans	3,466	4,078	4,014	1,995	1,954
Asset finance and lease liabilities	12,213	12,029	12,465	12,458	12,300
Cash, cash equivalents and interest-bearing deposits	5,917	5,011	6,016	6,945	6,683
Net debt	9,762	11,096	10,463	7,508	7,571
Net debt / EBITDA	n.m.	n.m.	4.2x	1.6x	1.4x

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Manageable debt repayment schedule

Capex reduced for 2020 and 2021

• 2020 capex €1.9bn vs €2.7bn expected at the end of 1H 2020
  • Fleet capex reduction driven by delays of 7 aircraft from 2020 to 2021
• 2021 capex €1.7bn vs €1.9bn expected at the end of 1H 2020
  • Fleet deliveries still expected to be 15 aircraft (5 shorthaul and 10 longhaul)
• 2022 deliveries not expected to be greater than deliveries in 2020
• Negotiations with OEMs continue

Cash operating costs more than halved

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.

Outlook

Luis Gallego, Chief Executive Officer

Outlook for 2021 remains uncertain

• Capacity for 1Q 2021 is uncertain but current expectation is for around 20% of 2019 capacity
• The outlook beyond 1Q 2021 remains highly uncertain. The vaccination programmes in our main markets should facilitate a recovery in international air travel through the progressive relaxation of border restrictions and quarantine requirements, assuming public health outcomes improve and risk levels reduce. However, the timing and pace of such re-openings to international air travel are not clear
• Should 2021 develop significantly worse due to a deterioration in public health outcomes and travel restrictions, further actions will be taken to reduce cash outflows and improve liquidity:
  • Further restructuring of cost base
  • Exercise employee contract flexibility and furlough support
  • Extract further concessions from suppliers
  • Further debt funding actions

Key themes

Luis Gallego, Chief Executive Officer

Bookings driven by the imposition and release of restrictions

Weekly new passenger booking intake vs. last year (5 Jan 2020 - 21 Feb 2021)

Positive reaction to UK Prime Minister's lockdown speech on 22 Feb

British Airways new bookings sold by hour, 22 - 23 Feb 2021 vs. previous 7-day average

VFR passenger demand more relevant on longhaul than shorthaul

Regional flown passenger revenue contribution (%) (Jul 2020 - Jan 2021)

A roadmap is needed for the re-start of passenger flying

Objectives

• 1) IAG believes the rollout of vaccination programmes in countries where our airlines are based and operate should facilitate the reopening of international aviation on which economic recovery depends
• 2) As public health outcomes improve and risk levels reduce, governments must work with the aviation industry to develop a roadmap for the restart of passenger flying
• 3) The roadmap should include the progressive removal of current travel restrictions, the adoption of digital solutions to support verification and exchange of data such as vaccination certificates or test results to simplify the passenger journey, and be aligned with international cooperation

Phased opening

• Markets should be opened on the basis of vaccine verification and pre-departure testing
• Governments should provide clarity about the levels of risk to health that are appropriate to allow travel restrictions to be eased
• The aviation industry will not recover if quarantine restrictions remain in place. Predeparture testing should be used instead as part of the phased removal of restrictions

Verification

• Authorities should develop and agree requirements and common standards to support digital tools that allow verification and exchange of data, including test results and vaccine certificates, working with industry stakeholders
• Governments should agree common standards including for a standard vaccine certificate
• IAG supports the use of travels apps to capture and store required information and provide proofs such as vaccination certificates that make travel safe but simple

International cooperation

• Governments should engage bilaterally and multilaterally with international bodies including ICAO and the European Commission to agree health standards for opening travel
• Government and industry stakeholders must ensure as much commonality as possible on protocols and heath protection measures so that travel operates to international standards

Digital solutions necessary to support verification and exchange of data

Currently airline staff have the responsibility to police and ensure compliance of government requirements

Multiple non-standardised certificates are being issued by medical labs and health authorities across the globe

Many other solutions are available in the market but…

• The coexistence of multiple solutions will be the norm in the near term
• Interoperability and consolidation will happen in the medium term

IAG Cargo demonstrated its agility during the pandemic

Strong foundations

• A global network of 350+ destinations providing connectivity across three main hubs
• Established product portfolio including Constant Climate (temperature controlled for pharmaceuticals), Prioritise (for express freight) and Secure (high value freight)
• Strong customer relationships Segmented account management, loyalty programmes and sector specialists, including Mail specialists (supported demand for e-commerce) and 24/7 Critical Service Centres
• 95% of IAG Cargo's capacity is from the bellyhold of IAG's passenger aircraft

Agility during the pandemic

• A global network maintained through 'Cargo only' flying serving all the top cargo markets. Agility to adjust and align network to market demand.
• Charter team established providing customer solutions in supply constrained environment
• Adapted passenger cabins to create incremental cargo capacity and opened new stations for Cargo freighters
• Contributed to the transport of critical equipment and essential supplies
• Expanded customer base and grew loyalty membership, signed agreements with governments, brokers and airline partners

Maintaining our commitment to lead the industry to Net Zero emissions

gCO2/pkm: grammes of CO2 per passenger kilometre (a standard industry measure for fuel efficiency).

Industry goals: 1) 2010-2020 1.5% p.a. fuel efficiency (IATA/ATAG), 2) 2020 onwards carbon neutral growth (ICAO/IATA/ATAG), 3) 2050 50% of 2005 emissions (IATA/ATAG)

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IAG had a strong position going into the COVID-19 crisis

Note: Pre exceptional operating result and RoIC 2011-2017 are based on the Group's statutory results (not adjusted for IFRS16); 2018 adjusted to reflect the estimated impact of IFRS16; 2019 post IFRS16. Lease adjusted margin 2011-2017; Operating margin (post IFRS16) 2018-2019. BA pilots' strike in 2019 depressed operating result by €137m (-0.4% impact on operating margin and -0.6% impact on RoIC)

Liquidity - Cash and undrawn facilities / Revenue (%)

Leverage: 2011-2017 based on the Group's statutory results (not adjusted for IFRS16); 2018 Group's statutory results with an adjustment to reflect the estimated impact of IFRS16 leases from 1 Jan 2018: 2019 post IFRS16. Adjusted net debt: 2011-2017 calculated as long-term borrowings plus capitalised operating lease costs less current interest bearing deposits and cash and cash equivalents; 2018-2019 long-term borrowings plus lease liabilities less current interest bearing deposits and cash and cash equivalents. Liquidity: Calculated as year end cash and undrawn facilities divided by LTM revenue

IAG's business model has proven resilient

Set to emerge from COVID-19 in a stronger competitive position

Conclusions

• Strong position both strategically and financially going into the COVID-19 crisis
• Quick and decisive actions taken to minimise net operating cash outflows
• We have made substantial efforts to raise capital since the start of the pandemic and enter 2021 with a higher level of liquidity than pre-crisis (€10.3 billion pro forma)
• Successful restructuring set to further improve IAG's competitive advantage in terms of reducing total cost and increasing the proportion of variable costs
• IAG continues to lead the consolidation of the European airline sector with the planned and re-negotiated acquisition of Air Europa while many competitors weaken
• Main priority now is to navigate towards a meaningful return to service as quickly as possible as vaccinations are rolled out and stringent border restrictions and quarantine requirements are lifted

Appendices

Net loss of €6.9bn in full year 2020

Reconciliation between pre exceptional operating result and post exceptional result after tax

€m	4Q 2020	4Q 2019	FY 2020	FY 2019
Operating result (pre exceptional)	-1,165	765	-4,365	3,285
Exceptional items	-306	-672	-3,061	-672
Operating result (post exceptional)	-1,471	93	-7,426	2,613
Net finance income/(costs)	-153	-148	-629	-561
Net financing credit relating to pensions	-	7	4	26
Net currency retranslation credits /(charges)	62	108	245	201
Other non-operating charges	-47	-54	-4	-4
Result before tax (post exceptional)	-1,609	6	-7,810	2,275
Tax	253	-105	887	-560
Result after tax (post exceptional)	-1,356	-99	-6,923	1,715
Adjusted EPS (pre exceptional) € cents	-	-	-122.6	76.9

Note: EPS is adjusted and diluted, information for 2019 has been restated to reflect the impact of the rights issue The weighted average number of shares for diluted EPS in FY 2020 was 3,528 million and in FY 2019 was 3,137 million

4Q 2020 and FY 2020 traffic and capacity statistics

Group performance	Quarter			Year to date
	Q4 2020	Q4 2019	vLY	2020	2019	vLY
Passengers carried ('000s)	4,298	27,805	-84.5%	31,275	118,253	-73.6%
Domestic (UK & Spain)	1,822	6,836	-73.3%	10,443	28,278	-63.1%
Europe	1,611	14,035	-88.5%	14,150	62,344	-77.3%
North America	180	3,126	-94.2%	2,462	12,662	-80.6%
Latin America & Caribbean	299	1,613	-81.5%	1,905	6,317	-69.8%
Africa & Middle East	351	1,576	-77.7%	1,790	6,162	-71.0%
Asia & Pacific	35	619	-94.3%	525	2,490	-78.9%
Revenue passenger km (m)	9,817	69,138	-85.8%	72,262	285,745	-74.7%
Domestic (UK & Spain)	1,596	5,168	-69.1%	8,528	20,859	-59.1%
Europe	2,111	15,613	-86.5%	16,474	72,148	-77.2%
North America	1,170	20,470	-94.3%	16,211	83,415	-80.6%
Latin America & Caribbean	2,464	13,371	-81.6%	15,716	52,411	-70.0%
Africa & Middle East	2,132	8,567	-75.1%	10,329	33,033	-68.7%
Asia & Pacific	344	5,949	-94.2%	5,004	23,879	-79.0%
Available seat km (m)	21,801	82,005	-73.4%	113,195	337,754	-66.5%
Domestic (UK & Spain)	2,638	6,037	-56.3%	12,013	23,915	-49.8%
Europe	4,236	18,873	-77.6%	25,516	86,349	-70.5%
North America	4,539	24,274	-81.3%	30,494	99,197	-69.3%
Latin America & Caribbean	4,988	15,547	-67.9%	21,629	60,644	-64.3%
Africa & Middle East	4,299	10,383	-58.6%	15,381	39,816	-61.4%
Asia & Pacific	1,101	6,891	-84.0%	8,162	27,833	-70.7%
Passenger load factor (%)	45.0	84.3	-39.3 pts	63.8	84.6	-20.8 pts
Domestic (UK & Spain)	60.5	85.6	-25.1 pts	71.0	87.2	-16.2 pts
Europe	49.8	82.7	-32.9 pts	64.6	83.6	-19.0 pts
North America	25.8	84.3	-58.6 pts	53.2	84.1	-30.9 pts
Latin America & Caribbean	49.4	86.0	-36.7 pts	72.7	86.4	-13.7 pts
Africa & Middle East	49.6	82.5	-32.9 pts	67.2	83.0	-15.8 pts
Asia & Pacific	31.2	86.3	-55.1 pts	61.3	85.8	-24.5 pts
Cargo (m) tonne km	928	1,432	-35.2%	3,399	5,580	-39.1%

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4Q 2020 and FY 2020 traffic and capacity statistics

Performance by airline	Quarter			Year to date
	Q4 2020	Q4 2019	vLY	2020	2019	vLY
Passengers carried ('000s)	151	2,608	-94.2%	2,118	11,649	-81.8%
Revenue passenger km (m)	229	5,720	-96.0%	4,056	24,753	-83.6%
Available seat km (m)	1,097	7,132	-84.6%	8,741	30,255	-71.1%
Passenger load factor (%)	20.9	80.2	-59.3 pts	46.4	81.8	-35.4 pts
Cargo tonne km (m)	17	49	-65.3%	124	173	-28.3%
Passengers carried ('000s)	1,630	11,553	-85.9%	12,285	47,710	-74.3%
Revenue passenger km (m)	5,304	38,146	-86.1%	39,117	155,580	-74.9%
Available seat km (m)	12,679	45,556	-72.2%	63,724	186,170	-65.8%
Passenger load factor (%)	41.8	83.7	-41.9 pts	61.4	83.6	-22.2 pts
Cargo tonne km (m)	750	1,055	-28.9%	2,751	4,210	-34.7%
Passengers carried ('000s)	1,114	5,547	-79.9%	6,796	22,449	-69.7%
Revenue passenger km (m)	2,833	15,591	-81.8%	17,757	63,991	-72.3%
Available seat km (m)	5,592	17,997	-68.9%	25,314	73,354	-65.5%
Passenger load factor (%)	50.7	86.6	-36.0 pts	70.1	87.2	-17.1 pts
Cargo tonne km (m)	160	326	-50.9%	519	1,194	-56.5%
Passengers carried ('000s)	4	530	-99.2%	445	1,877	-76.3%
Revenue passenger km (m)	53	2,326	-97.7%	2,153	8,011	-73.1%
Available seat km (m)	117	2,737	-95.7%	2,476	9,543	-74.1%
Passenger load factor (%)	45.3	85.0	-39.7 pts	87.0	83.9	+3.0 pts
Cargo tonne km (m)	1	2	-50.0%	5	3	+66.7%
Passengers carried ('000s)	1,399	7,567	-81.5%	9,631	34,568	-72.1%
Revenue passenger km (m)	1,398	7,355	-81.0%	9,179	33,410	-72.5%
Available seat km (m)	2,316	8,583	-73.0%	12,940	38,432	-66.3%
Passenger load factor (%)	60.4	85.7	-25.3 pts	70.9	86.9	-16.0 pts
Cargo tonne km (m)	n/a	n/a	n/a	n/a	n/a	n/a

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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, 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 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. 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.