Having reached nine years in office last January (maximum recommended in the UK corporate governance code), Antonio Vazquez announced his intention to retire in early January 2021, stepping down from his position as member and Chairman of the Board of Directors. The Board has unanimously approved the appointment of independent director Javier Ferran as his successor.
Antonio Vazquez will continue to chair the Board of Directors for the remainder of 2020 subject to his proposed re-election as director being approved by the next IAG’s Annual General Shareholders Meeting. This will enable him to support the succession of the Group's Chief Executive and allow for the orderly transition of chairman.
Willie Walsh, IAG Chief Executive, said: “I sincerely appreciate Antonio’s work in the creation and development of the group. The management team and I have always counted on his commitment, dedication and support. Antonio has shown great leadership in his management of the Board and has succeeded in getting the best out of everyone in good times and bad. Together we have created a group that has become a benchmark in the aviation industry. I thank Antonio for his friendship, his dedication during all these years, and for his work and defence of the company’s interests and that of its shareholders.”
Luis Gallego, Iberia Executive Chairman and incoming IAG Chief Executive, commented: “I took over from Antonio as Iberia’s Chairman and it has been a pleasure for me to work alongside him, contributing to the transformation of Iberia that he initiated.”
Antonio Vazquez commented: “It has been a real privilege to participate in the creation of this Group, to have led its Board of Directors, and to have worked alongside a unique management team. I am deeply proud of what we have built together, and I am confident that the strength and character of IAG will enable it to navigate the difficult circumstances we find ourselves in.”
Javier Ferran said: “It is a huge privilege to become IAG chairman and take over from Antonio. I would like to thank my fellow Board members for their support and trust. I am committed to leading the Group through this crisis and working with Luis to build a strong future, in which the Group will continue to take a leading role in the industry.”
IAG also presented Group consolidated results for the six months to June 30, 2020.
The results for the six months were significantly impacted by the outbreak of COVID-19, which has had a devastating impact on the global airline and travel sectors, particularly from late February 2020 onwards. COVID-19 situation and management actions:
- Most Group aircraft grounded in quarter 2, with small programme of passenger flights for essential travel and repatriation
- 1,875 additional cargo flights operated in quarter 2 to transport critical equipment and essential supplies
- Additional operating procedures implemented to protect customers and staff including facemask use and additional cleaning
- Liquidity boosted by actions including accessing Spain’s Instituto de Credito Oficial (ICO) facility and UK’s Coronavirus
- Corporate Finance Facility (CCFF). Also, British Airways’ Revolving Credit Facility extended and additional one-year bridge aircraft financing facilities agreed and implemented in quarter 2
- Multi-year renewal signed with American Express on July 24, including 830 million euros payment, a significant part of which is Avios pre-purchase
- Cash operating costs for quarter 2 reduced to €205 million per week, with April and May slightly lower than previously estimated at 195 million euros per week, despite additional cost of operating cargo-only flights
- Current capacity planning scenario for an increase through quarter 3 and quarter 4, to -74 per cent and -46 per cent versus 2019 respectively, but plans highly uncertain and subject to easing lockdowns and travel restrictions
- Based on our current capacity planning scenario, IAG would reach breakeven in terms of Net cash flows from operating activities during quarter 4 2020
- Government wage support schemes accessed in main employee bases and other measures agreed to reduce employee costs due to much-reduced flying programme
- Capital spending for 2020 reduced by 1.5 billion euros, against the original plan, with 2020 fleet capital expenditure covered by committed financing
- Deliveries of 68 new aircraft due in 2020 to 2022 deferred and certain legacy aircraft retired early, including 32 Boeing 747s and 15 Airbus A340-600s
- IAG expects it will take until at least 2023 for passenger demand to recover to 2019 levels and is restructuring its cost-base to reduce each airline’s size, with consultations being undertaken locally as required
- Active discussions remain ongoing with Globalia regarding a potential restructuring of the Air Europa acquisition, taking into account the impact of the COVID-19 pandemic. Any agreed transaction would remain subject to regulatory clearances.
IAG period highlights on results:
- Passenger capacity operated in quarter 2 down 95.3 per cent on 2019 and for the six months down 56.2 per cent on 2019
- Second quarter operating loss 1,365 million euros before exceptional items (2019 operating profit: 960 million euros)
- Operating loss before exceptional items for the half year 1,900 million euros (2019 operating profit: 1,095 million euros)
- Exceptional charge in the half year of 2,137 million euros on derecognition of fuel and foreign exchange hedges for 2020 and impairment of fleet
- Loss after tax before exceptional items for the half year 1,965 million euros, and 2020 statutory loss after tax and exceptional items: 3,806 million euros (2019 profit: 806 million euros)
- Cash of 6,016 million euros at June 30, 2020 down 667 million euros on December 31, 2019. Committed and undrawn general and aircraft facilities were 2.1 billion euros, bringing total liquidity to 8.1 billion euros.
Willie Walsh, IAG Chief Executive Officer, said: “In quarter 2 we’re reporting a record operating loss of 1,365 million euros before exceptional items compared to an operating profit of 960 million euros last year. Total operating losses including exceptional items relating to the early retirement of British Airways’ Boeing 747s and Iberia’s Airbus A340s came to 2,177 million euros. “We operated 1,875 cargo-only flights using passenger aircraft in quarter 2 which was an important cash contributor to the Group. All IAG airlines made substantial losses. As a result of government travel restrictions, quarter 2 passenger traffic fell by 98.4 per cent on a capacity reduction in the quarter of 95.3 per cent. We have seen evidence that demand recovers when government restrictions are lifted. Our airlines have put in place measures to provide additional reassurance to their customers and employees on board and at the airport.
“We continue to expect that it will take until at least 2023 for passenger demand to recover to 2019 levels. Each airline has taken actions to adjust their business and reduce their cost base to reflect forecast demand in their markets not just to get through this crisis but to ensure they remain competitive in a structurally changed industry.
“IAG continues to take action to strengthen its balance sheet and liquidity position including more than halving its operating cash costs and significantly reducing its capital spending. At the end of June liquidity stood at 8.1 billion euros. Based on our current capacity planning scenario, we would reach breakeven in terms of Net cash flows from operating activities during quarter 4 2020.
“Subject to shareholder approval at our AGM on September 8, IAG will undertake a capital increase of up to 2.75 billion euros which will enhance the Group’s resilience, balance sheet and liquidity position. We’re delighted that our largest shareholder, Qatar Airways, has already committed to support the proposed capital raising. This will best position IAG to continue
executing its strategic objectives and capitalise on its existing market leading position and future growth and consolidation opportunities.”
Tags: IAG
