International Consolidated Airlines Group S.A.

Good morning, everyone. Thanks for coming to IAG's 2021 results presentation, the first one we've done in two years in person. So thank you very much for making the effort to come here. It's nice to see many old friends and also some new ones that I've seen on teams for the best part of two years that we've met in person for the first time this morning. We have our chairman here today, Javier Ferran. And we have, obviously, our CEO, Luis Gallego, and CFO, Steve Gunning, who will be conducting the bulk of the presentation. And then in the front row, we have various members from our management committee. So we have Sean from BA, Lynn from Aer Lingus, Marco from Vueling, and Javier from Iberia. So they'll be all ready to answer your questions that you may have at the end of the presentation. So I'll now hand over to Luis for his presentation.

Thank you very much. Good morning, everyone. It's a pleasure to see you again face-to-face after two difficult years. This morning, we reported a precessional operating loss of 2.97 billion euros for 2021, which is in line with the guidance that we gave you of 3 billion euros. For the fourth quarter, pre-exception operating loss was €305 million, a significant improvement over the €485 million that we had in the third quarter and also over the €1 million that we had in the previous two quarters. We were able to operate 58% of the capacity up from the 43% that we had in the third quarter And we achieved for the first time since the starting of the pandemic, positive EBITDA. Operating cash flow also in the second half of the year was positive, 1 billion euros. Most of this in the fourth quarter, driven by the positive EBITDA that I told you before and the strong booking activity. October and November were much stronger than we expected. mainly because of the opening of the North Atlantic market on the 8th of November. Unfortunately, on the 25th of November, we started with Omicron, and because of the new travel restrictions and increased testing requirements, we had an impact in our bookings. December was, therefore, weaker than we expected, But nevertheless, it was not a very bad month because we have a lot of PFR traffic, a lot of people visiting friends and relatives for Christmas. And also, leisure markets, long haul, work very well, like the Caribbean. The year ended with our total liquidity of 12 billion euros, our highest for a quarterly period end. And we reduced the net debt at 11.7 billion euros. The reduction during the fourth quarter was 600 million euros, but mainly was because of the delay in the delivery of seven long-haul aircraft, Airbus and Boeing. And for that reason, the capex for the full year was 0.7 billion euros instead of the 1.3 that we told you in our previous guidance. Right now, our main priority is to restore the operations of our operating companies. We want to fly around 90% of the capacity that we had in 2019 this summer. And the priority is also to improve the customer experience and the operational resilience. Since October last year, our airlines have been working to restore the capacity to bring back aircraft from storage, to bring back our people from different furlough schemes, and we are recruiting and training people, mainly people in the front line, such as cabin crew. Erlingus, the focus now is to restore 90% of its North Atlantic network, and they are preparing also the Manchester base for the peak summer season. British Airways intends to operate 100% of the North Atlantic operation in the third quarter. And all the flights to New York, for example, now they are operating with a new club suite seat. BA plans 100% European operation from the second quarter, including the launch of BA Euroflyer on the 29th of March. Iberia is also planning to restore the Latin America operation at the end of the year, but in the summer they will expand the domestic network, and also the presence in North Atlantic will be larger with the new destinations to Dallas and Washington. Welling expects the capacity to come back to 2019 levels by April, and also they have expanded the Paris-Orly base with the slots that they won after the remedies that they put to Air France. And they are going to increase also for aircraft in London Gatwick during the summer. IAG loyalty has a very strong year in terms of customer acquisition, customer relevance, profitability, and cash generation. And I think it was... very important during this crisis for the group. We have announced earlier this week a new agreement with Qatar Airways Privileged Club. They will adopt Avios currency globally. And also we will be extending our relationship with Barclays in the UK with new products that we will launch at the end of the quarter. Both initiatives ensure that they are going to increase IAG's loyalty customer base and our customer engagement. And finally, IAG Cargo. They had an extraordinary year. 2021 was a huge success. The focus this year will be on offering more destinations. We are restoring the capacity. We are flying more passengers, so they need to come back to the old model in some way. So they are going to come back to fly more to North America and South America. And we are going to reduce the only cargo flights and the charter. Before I hand over to Steve, I would like to talk to you about our outlook for 2022. We are planning the capacity in the first quarter of 65% compared to the 2019 levels, slightly more than the 58% that I told you before that we flew in the last quarter of the year. However, we are expecting significant operating loss in this first quarter, and there are three reasons mainly for this. First of all, the normal seasonality. Even more when you have Eastern in April, as we have this year. Secondly, the impact of Omicron, February and January and February, they were impacted for Omicron and the number of bookings. And thirdly, the impact of restoring the capacity that I told you before, bringing back aircraft from the storage, bringing back our people, training people, recruiting people. But what we see from March onwards, including Easter and summer period, is that Omicron has not affected the number of bookings. And to be honest, what we see is a strong recovery. And these bookings give us the confidence to plan for 90% of the capacity of 2090 levels for the third quarter. Overall, we are planning the total group to fly 85% of 2090 capacity levels for the full year. And we expect sustainable operating profitability from the second quarter and a significant operating profit for the full year. Operating cash flow is also expecting to be significantly positive. And I said before that we have reduced the capex in 2021 because of the delay in the delivery of the long haul aircraft. Now we are going to bring those aircraft. And that's the reason this year we are going to incorporate in our fleet 25 new aircraft. The reason to do that, as you can imagine, we rounded 50 long-haul aircraft during the crisis, and we need to bring new aircraft to restore the capacity. So because of that, we expect the CAPEX for this year to be significantly higher than in 2021, and we expect to have 3.9 billion euros As a consequence of that, net debt is going to be increased as a result of these investments. And all this that I told you is assuming that we have no further setbacks related to COVID. And also we need to take into consideration the geopolitical situation that we are living right now. And at this point, I want to provide you some information about the Ukraine situation and the impact for the group. Following the UK government's decision to ban Russian carriers from landing in the UK yesterday, we took the decision to cancel the flight that we have to Moscow today. And also we have rerouted the flight that we were operating to Singapore and Delhi, not to fly over Russia. For IAG, the impact of this crisis we are still monitoring, but it's true that the capacity we are flying to the east is very reduced, and all the flights that we are doing now we can reroute, so we can maintain the schedule that we had in mind. And now I am going to hand over to Steve for the financial presentation. This is going to be your last results presentation. So I want to take the opportunity to tell you thank you. Thank you for all these years. Thank you for your effort. And thank you for your support these two years. And I wish you the best.

Good morning. Okay, you don't have to say good morning if you don't want to. That's a tough crowd. Okay. Good morning. Oh, that's much better. Thank you. It seems strange, actually, to think it was two years almost to the day the last time I stood in front of you. I think it was possibly in this auditorium as well. So a lot's happened in that intervening two-year period. And then just to add to that, the developments over the last 48 hours have been very significant, haven't they? And our thoughts are with the people in the Ukraine at the moment as much as anything. So it's my pleasure, as Luis said, to take you through the financial results for 2021 and some other aspects. So let's do that. So if I take you through the highlights slide, I think as Luis has already said, in Q3, we began to see the business turn. We said it was an inflection quarter. We stopped burning cash. and actually the net cash flow from operating activities was slightly positive. In Q4, despite Omicron, we've continued to see that progress. So EBITDA was positive to $250 million, and actually net cash flow from operating activities was positive to nearly $800 million. So Q4 was a strong quarter despite the fact that Omicron came in at the end to take some of the edge off of it. But in terms of where we've been over the last two years, it was a real progress. If I look at the slide here, if we go through it by quadrant, if we look at the top left, you'll see that we flew 58% of 2019 capacity. We've guided you to around 60%. So that was pretty much as expected. Load factor was about 2.5 points better. So pretty much, as we were saying, around the Q3 time, In absolute ASK levels, Q4 was about 20% more ASKs than Q3. If you look to the top right and you look at the operating result, clearly the operating loss has continued to narrow. So we incurred a loss of 485 in Q3, and that's now down to 305. So it continues to narrow. Overall, we came within our guidance. We said we'd be around 3 billion. We were 2970. If I look at consensus, that's about a $16 million beat on consensus. If we look at the bottom left on debt, you'll see that the gross debt went up about $3.9 billion during the course of the year, but net debt only went up $1.9 billion. The gross debt went up because of the funding initiatives that you'll all be very familiar with, the unsecured bonds, the convertible bonds, the $2 billion of UKEF. But as you can see, net debt only went up 1.9 billion because the cash position improved 2 billion as well. And I'll take you through some more detail on that later. And then if you look at the liquidity position, we finished with 12 billion of liquidity. That's a quarter end high for us. We were at about 12.1 in October on a pro forma basis. So a very strong liquidity position going into 2022. And I have to say, Because I got a couple of questions at the Q3 results that said, well, do you think you've got a bit much? When Omicron started to hit late November, I was very pleased to have the sort of liquidity position that we had. So those are the highlights. Why don't we talk a little bit more about the actual operating result for the quarter? Now, we've given this to you both quarterly and for the full year. And we've given you two comparators, versus last year and versus 2019. I'll primarily focus for the purposes of this on Q4, and I will sometimes refer to the position versus Q3. So in terms of ASKs, as we said, we flew 58% of 2019 ASKs, but actually our revenue was only 50% of 2019 level for the passenger business. That's primarily because the load factor was down compared to 2019, so that brought the unit revenue down. It was Far less of a yield issue, it was primarily a load factor issue. If you look at the cargo revenue, as Luis has already indicated, the cargo businesses had a very strong year indeed. In fact, cargo revenue was up 71% compared to 2019, and up 23% even compared to Q3, and Q3 had been a record quarter. So a particularly strong performance by cargo. We look at costs. The non-fuel costs rose broadly in line with the capacity. A number of things to note there. The furlough scheme in the UK ended at the end of September, so there weren't benefits coming through from that, and some of the other furlough schemes reduced. We have incurred additional costs because we've been rebuilding capacity during that quarter. We had some impairments that we didn't run through, exceptional, that we thought were business-as-usual And also selling costs were up considerably. And selling costs, you take the selling costs when you take the booking, not when you take the flying. So because we saw strong booking coming through in Q4, we saw selling costs up. So overall, non-fuel costs were broadly in line with capacity. On the fuel costs, they were up about 30%. And broadly, half of that was because the price was up. And roughly half of that was due to the fact that the amount of flying was up as well. And you'll see on the slide that there's 27 million of exceptional credits. That's us truing up some restructuring provisions we'd made previously and an impairment provision we'd made previously. So it's actually a credit for the year. If that's the performance overall for the group, let's talk about it by airline.

I think

We normally provide this on a full year basis, but we thought providing it for quarter four would be more insightful and more interesting. I think for Aer Lingus, Aer Lingus has probably had the toughest time of all of our operating companies. In terms of geography, more exposed to the North Atlantic than any of our other businesses, and that's been closed for 10 months out of 12 for this year. On top of that, it doesn't have a meaningful domestic business as well, whereas some of our other businesses have benefited from their domestic business. On top of that, they probably had the most severe government restrictions probably of any country that I can think of. So through all of that, it's been a very tough time for Aer Lingus. And you can see that coming through on the numbers. They flew less capacity than our other operating companies during Q4 and still had the lowest load factor. So you can see the impact of those restrictions coming through. We turn to BA. The encouraging part about the British Airways results was for the first two months of the quarter, October and November, as the North Atlantic opened, we really saw some momentum progress in the business. We were ahead of our expectations, and it was really starting to motor as a business. We got good intakes coming through, and then Omicron hit and sort of derailed us for the month of December. Despite that, the operating margin lost narrowed quite considerably. So in Q3, the operating margin was minus 35%, and in Q4, only minus 15%. So progress there from where we were, but still a lot to do. The other standout item on the British Airways performance was on the cargo revenue, which BA was probably the largest beneficiary of the strong performance of cargo. If I turn to Vueling, I'll come to Iberia last. If you look at Vueling, Vueling, you know, a large low-cost carrier. All the low-cost carriers you would expect typically to make a loss in Q4, even in normal times. If I look at the performance they achieved in Q4 at minus 16%, a much better margin than with, which is minus 54, or EasyJet, which was minus 34%. So it was a very respectable performance by Vueling. They were building up capacity going into December, up to about 90% of 2019 levels. And they were starting to operate the Orly remedy slots as well. So unfortunately, Omicron came at a poor time for them. But overall, it was a respectable performance. And saving the best till last, I think the Iberia performance throughout the year, but particularly Q4, has been strong. As you'll see there, an 8% operating margin during the course of the pandemic is very good, and an operating profit of $82 million. All of the businesses, whether it's handling MRO, whether it's Iberia Mainline, or whether it's Iberia Express, were profitable. And really, I would make a shout out to Iberia Express. They made an operating margin in the year of nearly 13%, which is quite remarkable given the challenges of the operating environment. So Iberia Express performed particularly well during the year and particularly well in Q4. their December result was better than their October and November result, which, given Omicron, you wouldn't have necessarily anticipated. That's talking about income statements, but let's talk about the cash situation. And as I said before, in some ways, I find the cash bridge over the last couple of years more insightful than the income statement. What you'll see here is that the cash has increased during the course of the 12 months by $2 billion. As you know, liquidity... and cash have been our number one financial priority over the last two years. And you can see that coming through on this slide. Let me take you through just a few of the highlights. The EBITDA was negative of $1 billion throughout the year. But what was encouraging was to see the EBITDA go positive in Q4 for the first time. And that was positive to the tune of about $250 million. So that was encouraging to see. Deferred revenue is up considerably, and that's primarily due to sales in advance of carriage. You know, we saw both in half one and in half two good inflow of cash. Now, normally you'd expect an outflow of cash in half two, but given the nature of the pandemic and the development of the business, it was good to see that cash come through. Some element of that improvement in deferred revenue is around foreign exchange translation. But 80% of it, the vast bulk of it, is genuine cash coming into the business. In terms of vouchers, the actual voucher balance has remained remarkably constant. It's staying at around $1.2 billion and hasn't moved a lot. So interesting development there. In terms of other working capital movements, clearly as we start to build the business, we start to incur more costs, et cetera. There you're seeing the trade payables, et cetera, starting to increase as the business grows. In terms of gross capex, as Luis has already alluded to, a record low. It was only three quarters of a billion during the course of the year, even lower than the 1.3 that we guided. And I'll talk more about capex later on. Proceeds from sales was largely due to some sale and leaseback transactions during the year. Proceeds from borrowings are broken down on the slide, and you'll be very familiar with them. And in terms of the repayment of borrowings, I would make the point that during the course of the year, we repaid the CCFF commercial paper program that we took out, which was to the tune of about 330, 340 million euros. So overall, we've managed the cash very tightly during the course of the year, and it's improved by 2 billion due to the various funding initiatives that we've taken. If that's the cash position, then let's build it up to look at the overall liquidity position. And as I said earlier, the liquidity at the end of the year was up to $12 billion. In terms of the facilities in the second half of the year, there were probably two interesting factors. One, we took out a WTC to fund some aircraft purchases, $785 million. We've only drawn down $100 million of that during the course of the second half. It'll be used for the purposes of deliveries in 2022, but it means we have those facilities available at the end of the year. 2021. And the other big movement in the second half was the second transaction we did with the UK Export Finance, which was to have a further billion credit facility. As we've said before, and I'll say again, we've not drawn down on any of our general facilities through the pandemic. If that's liquidity, let's talk about CapEx, because I said I would touch on that So on this slide, you'll see three snapshots. You'll see what we said pre the pandemic, a capital markets day 2019, which seems an awful long time ago, where we said we would expect in that three year window of 20 to 22, the capex to be 14.2 billion. Then just before we were doing the capital raise in mid 2020, we had done a lot of work to defer deliveries and to defer aircraft payments. We didn't cancel any of the orders, but we did a lot of work on deferring and we brought down our guidance on capex for the three years down to seven billion. Our current plan for the three year period is now six point five billion. Once again, we haven't canceled any orders, but we have deferred quite a number of orders out into the future. And there you can see the $6.5 billion. Really, I'd make two comments about this. Overall, CapEx for the three years has further reduced by the half billion, as you can see in the current plan. And secondly, you can see that the 2022 CapEx plan is $3.9 billion. And if you're trying to get under the skin of the $3.9, about $3.3 of that relates to fleet. About half of that 3.3, just over half of it relates to final delivery payments. And those are the payments that you make when you take delivery of an aircraft. And we'll have 25 aircraft coming in during the course of 2022, of which 15 of those will be wide-bodied aircraft. And the reason we're taking those aircraft in is because we need to restore the capacity that we had previously. We early retired 32 747-400s. And we early retired 15 A340-600. That's a lot of lift that we took out of the business, and we need to replenish. And we also need to replenish it because we want to meet our ESG commitments. And these new generation aircraft are probably 25% to 30% more fuel efficient than the ones we've taken out. So that's one of the reasons we didn't cancel orders. We want these new aircraft, and we've had to just reprofile the receiving of them. About a third of that $3.3 billion of fleet payments are what are called pre-delivery payments. So ahead of receiving the aircraft, you make payments, and those can start anywhere from two years before delivery, and you might have several stage payments going forward. And of that, it's about $800 million, $900 million. Of that, about $400 million relates to earlier payments when they were due, and we pushed them out from 2020 and 2021 into 2022. And the other half of it is very much business as usual for pre-delivery payments. And then the rest of the fleet payments or fleet expenditure relates to reconfiguration work, particularly with regards to the new Club World Suite. It's a really top product that we've got. We get very good MPS scores from it. And it's essential that we have a very competitive club product as we come out of the pandemic. So we've continued to invest in that, and we'll do so in 2022. Last comment on the capex for 2022, and particularly fleet. We would expect, given that 3.3 billion of fleet spend, to be able to finance about 2.3 billion of that during the course of the year. On the next slide, we just show those plans, but show aircraft deliveries split between wide-bodied and narrow-bodied aircraft. So I don't intend to spend too much time on that. But as I say, the key thing for us is that we need to replenish the capacity that we've taken out. So let's talk about net debt. And as you can see here, the net debt increased $1.9 billion during the course of the year. And if you break down that $1.9 billion, Interestingly enough, about a third of that, 0.6, relates to foreign exchange translation. About 0.5 of it relates to new direct leases that was taken onto the books. And about 0.8 of it relates to actual what I would call genuine cash flows. So that's what's behind the 1.9 billion increase. What I was heartened to see was net debt actually fell in Q4 by 0.7 billion. That was half due to normal amortization payments that we made. and also due to the positive cash generation that we had in the year. It was interesting that when we did the consensus exercise, we did ask people for what they thought the net debt would be. Our actual net debt finished the year over a billion lower than people were expecting, so a far more healthy position. Interestingly enough, the CapEx number is higher than most of the consensus positions, so there's broadly a high degree of wash between those two numbers. But as Luis said, our expectation for 2022 is we do expect that net debt will increase during the course of the year because we have a full year of CapEx, but we're still building up the EBITDA number from where it's been in the past. The next penultimate slide is with regards to the debt repayment profile. And what you can see here is there's not a great deal of variability over the next four years. It's only until you get to 2026 that you have a big spike in regards to the UK export finance loan becoming due. I would be expecting us to refinance that a long time before that comes due in 2026. So that's the debt maturity profile, which is very sensible. This doesn't include leases, just to be clear. But I think given our liquidity, it puts us in a good position. the way that has been managed. And then last slide from me relates to fuel hedging. I think we've changed this slide about three times given the things that have happened over the last two or three days. But what we've tried to do is give you here a feel for the hedging ratios that we've got and the effective blended price. And we've used the $900 per metric ton jet fuel price scenario. So hopefully that will give you some help when you do your models and you're modeling your outcomes. Those are the slides on the financial results. I think, as you can see, we've made a lot of progress in Q4, building on the progress in Q3, despite the fact that Omicron hit us at the very end of the quarter. As it's my last results announcement, I'd just like to say thank you. I've enjoyed it immensely despite the pandemic. I'm going to put my feet up for a few months and then decide what's next. But I'll be able to relax while I'm putting my feet up knowing that the business is in safe hands. So with that, I'll hand it back to Luis.

Okay. So thank you very much, Steve, for your kind words. In the first year of the pandemic, our main focus was to preserve gas, to ground aircraft, to raise liquidity, and for sure to deal with all the safety elements of the crisis. But our focus changed and we started a transformation program to change the business and to emerge stronger after this crisis. And this transformation is going to affect the main parts of our business, our strategic position, our customers, our people, our sustainability, and for sure our cost efficiency. In terms of our strategic positioning in our markets, we have taken a lot of steps to try to rebuild the network and also to try to take the opportunities that others have left in the market. Heathrow, for example, now has better connectivity, especially on North Atlantic and in European routes. You know that we transfer destinations from Gatwick to Heathrow. Some of them are still in Heathrow. For example, Naples and Venice, they are still there. They are working very well. and we are capturing significant connected traffic to North Atlantic. BA is returning to almost all the destinations that they have in North America this summer, and we are offering more destinations than our competitors. We know that the total industry capacity in the US market is going to be reduced this summer, and as a consequence of that, we are going to have an opportunity At IAG level, sorry, on North Atlantic, we expect to have the capacity, as I said before, around 100% during the summer because we are going to have also Aer Lingus Manchester base operating. On Latin American routes, Iberia is going to fly at the end of the year almost 95% of the capacity that they had previously in Latin America. And during this crisis, they have taken the opportunity that others, they have left as a consequence that, as you know very well, some of them, they were in Chapter 11. So I think Iberia, they have done very well capturing these opportunities and increasing the market share in the main market. On short haul routes, BA will restart the Gatwick operation with a more efficient operation with BA Euroflyer, I'm willing they will continue the expansion in Orly. And as I said before, they are going to operate also from Gatwick with four aircraft. That's about the network. If we move on to product, we continue enhancing our customer proposition. British Airways, they still continue the focus on taking its premium brand to the next level. At the end of 2021, Club Suite has been installed on 37 long-haul Heathrow aircraft, 40% of the fleet, and this will be increased to 68 aircraft, that is 60% of the Heathrow fleet by the end of 2022. 2022, we'll see the highest number of aircraft that we are embodying with this new Club Suite. And also, as Steve has just mentioned, we have slowed the delivery of the new aircraft. And BA now is recovering the transformation program of this aircraft that we delayed to have a total number of aircraft covered of around 100 at the end of the year. Another example of things that we have done for our customers is the new distribution capability agreement with Amadeus and Travelpol. These agreements are not only to save costs, are agreements that allow us to enable more dynamic pricing, to sell more ancillaries, and also we have the ability to personalize the offers that we make to our customers. And there are other many examples that you can see in the slide of things that we have done during this period. For example, Iberia and BA's catering proposition, of the improvement of BA Holiday's offering. Boeing, I think, is also very important, what they have done this year. They were the most punctual European airline, and they also received from Skytrax the award as the best low-cost airline in Europe. I want to congratulate Marco and the team for this extraordinary job. And the increased relevance of IAG loyalty has been also key, as I highlighted at the start of this presentation. We are also upgrading the customer centers. And I know that addressing the customer center issues is one of the main priorities of VA. And our people. Our people are critical to deliver everything that we want for our customers but also to ensure that this transformation that I told you before succeeds. They have suffered enormously during this pandemic, but we are very proud, very proud of all of them and the way they have responded to this adversity. And we have tried to support our people in many ways throughout the pandemic. First of all, we tried to save as many jobs as we could making use of the different government job retention schemes, of which I will say that ERTE, the force majeure ERTE in Spain, has been the most effective among the different measures that we had. In the case of Aer Lingus and BA, I think the government retention scheme was not enough. And unfortunately, we didn't have any other choice than to have people leaving the company. During the pandemic, also all the operating companies have been focused in ensuring the well-being of our employees, both the people in the operation and also the people that they were in the furlough skins. For example, early in the pandemic, we introduced all the measures to clean the aircraft and to protect our customers and the crew for the spread of the virus. I am sure that some of these measures will keep in place for a period of time, and who knows, that maybe forever. Another example, in British Airways, they offer to the employees its employee assistance program that was also extended to the family members of employees. And most of the people that they were in furlough skiing now, they are coming back. for the 90% of capacity that we want to fly in the third quarter. Also a significant proportion of office people, they are coming back. We maintain still the hybrid model and we are analyzing what's going to be the best scheme for the future. And during the pandemic, we continue hiring people, for example, young graduates in order to maintain the pipeline of talent that is so necessary in all the areas of the company. As I told you before, we are now recruiting a cabin crew and we are training all of them. And finally, our focus in diversity and inclusion was there during all the pandemic. For example, talking about gender diversity in senior management, we achieved our objective of 33% of women in 2022. And we are increasing our target to 40% by 2025. And sustainability. IAG continues to lead aviation globally. You know the ambition to the net zero emissions by 2050. We were the first group worldwide to commit to this goal three years ago. And we were the first major airline to extend this goal including the scope three emissions this year, last year, sorry. We were also the first European airline group to commit to 10% of sustainable aviation fuel by 2030. And we are reaching agreements with different suppliers. For example, Phillips 66 in the UK and Cepsa in Spain. We have continued making investments such in Cerro Avia, that, you know, they are aiming to have a hydrogen electric engine ready for 2024. And I'm glad to say that we have been recognized for all this effort. You can see in the slide that we are the highest-rated airline group globally, based on different ratings, like the first one, the Carbon Disclosure Project, or CDP. We maintain our A-. Only two other airlines worldwide have A ratings, that are our partner American and ANA in Japan. Second, two weeks ago, we received a supplier engagement rating from CDP of A, this is separate from the previous CDP, and reflects our engagement with our suppliers on sustainability issues. The only other airlines that have this A rating is United. And third, the TPI, the Transition Pathway Initiative, it is now at the highest level, level four, up from the level three in the two previous years. We are going to continue doing a lot of more things in this area. And you can see in the slide that we are advertising our ESG Day that we plan to have on Friday, 20 of May. So we will send you invite for this event. It will be a morning session and we will end at lunchtime. And as I told you before, I'm confident that AIG will emerge from the pandemic with a more competitive cost structure. After the initial restructuring that we had to do in 2020, we have continued transforming the business and we have relaunched BA East Gatwick with a new platform, more efficient platform. We have rationalized loss-making basis such as Shannon Bays of Erlingus last year. We have increased the level of outsourcing that we have in different areas in order to have more variable costs. As an example, Erlingus Catering and BA Handling also in Gatwick. And we have used the procurement strength that we have as a group to renegotiate with key suppliers and important manufacturers and maintenance providers. We are in the process of modernizing the fleet. As Steve said before, we have retired 47 white bodies, 32 747s in BA and 15 346 in Iberia. And we are replacing those aircraft with the latest technology in the market, the Airbus 350s, the Boeing 787s, and in the future with the Boeing 777-9. And I think this is a familiar slide because we have presented each quarter since mid-2020. This one is of 20th of February. And the last time we showed this booking was the 31st of October, which is indicated in the slide. After Omicron, the 25th of November, you see that the bookings fell from levels of 80% that we had before, comparing to 2019 levels, to around 55-60% of 2019 levels. But I'm pleased to say, and you can see in the slide, that bookings have risen again since the start of 2022, and now are back to the 80% of 2019 levels in the last few weeks. So we consider that the effect of Omicron in the bookings has finished. Long-haul and short-haul are both back to around 80% of the 2019 levels. And you see in the right-hand side that the Spain domestic remains the strongest area with around 90% of the bookings. And also, we have seen this slide before. This is about revenues, the flung revenues. for BA and Iberia compared to 2019 since the start of the pandemic, including last January. It's important to remind that our definition of premium class is first and business class. That is not the same that others, for example Air France, that they consider World Traveller Plus premium economy as premium. We have World Traveller Plus in the non-premium part. In the upper chart, you can see the light blue line for BA is premium, and the dark blue line, premium business. For Iberia, the yellow line is premium leisure, and the purple line, premium business. And you can see that premium leisure for both airlines has steadily recovered until November, but you can see the dip in December as a consequence of Omicron. Premium leisure in December was back to 60% for BA, and for Avelia was much higher, around 90%. Premium business travel is clearly lagging behind for both airlines. For BA, they had a high of 30% of 2019 levels in November, and they have declined to 20% in January due to Omicron. For Iberia, it peaked at 60% in November, and now it's around 50%. And if we see by regions that you can see in the inferior part of the slide, the standout region for VA remains Caribbean, around 100% of 2019 levels. And it was not hardly affected by Omicron. I think we can see here that the restrictions that the tourism had was very important in order to maintain this level of bookings and revenues. And for Iberia, the stand-up region is domestic, followed by Central America, both running at about 100% of 2019 levels. Premium leisure on North America routes, they have a significant boost when the U.S. reopens the 8th of November with VA rising to 70% and Iberia to 100% of 2019 levels. So we are expecting premium business to resume the gradual recovery over the next month as Omicron in some way is finished and people, they are returning to the offices. And now some more detail on the outlook. First of all, our capacity for the next year. For the first quarter, we are planning to operate 65% of the 2019 level, slightly more than the 58% that I told you we operated in the final quarter of the last year. Previous Omnicron, we had the idea to operate more than this 65%. But we continue to plan for a 90% operation in the third quarter, as we have indicated before. And this is comprised of 100% of North Atlantic operation, 100% short-haul, and around 90% of long-haul for other regions, excepting Asia, that, as you know, they continue with a lot of restrictions. For the whole year, combining all this, the capacity we plan to operate is 85%. And if we look at this by airline level, they will be flying the most compared to 2019, 105%. But I think we need to take into consideration the base that is very small. So only are operating a few aircraft. Boeing plans to fly 95% of its 2019 capacity for a full year. Iberia, 85%. You can see that although Erlingus and BA, they were behind Iberia and Vueling in 2021, they are going to operate 90% in the case of Erlingus and 80% in the case of BA, catching up very quickly Iberia and Vueling. BA is going to fly 80% mainly because they cannot fly to Asia, as I said before, and that has an impact in the capacity. And we have a lot of confidence in our capacity plans as long as we don't have any further restrictions and as far as the government continues to be practical with this situation. Across our network, with the exception of Asia, travel restrictions for fully vaccinated people have been removed. The UK removed pre-departure test requirement, as you know very well, on 7th of January and post-arrival test on 11th of February. And because of that, we have an important increase in our bookings. The EU made a recommendation to the member states in order to avoid restrictions only linked to the vaccination status of the customer, but not linked to the country. And thankfully, our main EU home countries, Spain and Ireland, they are following this recommendation. I think the main still obstacle that we have is the pre-departure test to go to the U.S., We are lobbying also with US carriers to try to remove this restriction. We are hopeful that it will happen. And even in Asia, as I said, it's difficult to fly there. We see some signs of relaxation. For example, we saw Australia earlier this week and India two weeks ago. India is by far our largest market in the Asia region. MBA will resume flying to Australia next month for the first time in two years. It's true that China and Hong Kong remain highly restricted as part of the zero COVID policies. We don't expect this restriction to be relaxed until when advanced 2022 and maybe even cannot happen this year. And coming back to profitability, based on our current plans, we expect to be significantly profitable in 2022. The first quarter, however, as I told you before, is going to have a significant operating loss, mainly for the three reasons that I told you, normal seasonality, also the impact of Omicron, and all the costs that we are assuming to bring back aircraft and people to produce the 90% capacity that we want to fly in the third quarter. For the second quarter, we will have 85% operation overall. And we expect to be sustainable. Sorry, to be profitable. And the operating level, I think we will have the peak in the third quarter and we will continue this operating profitability during the rest of the year. We expect also the operating cash flow to be significantly positive for the year. All this, as I said before, considering the geopolitical situation and also considering that we hope we will not have any setback in the COVID restrictions. And finally, the conclusions. So, we have continued to invest in our people, in the fleet, and in the product in order to deliver the best customer experience, to improve the operational resilience, as we have demonstrated with all the initiatives that we presented before. We continue trying to lead the industry to achieve a sustainable aviation industry. In the fourth quarter of last year, we have demonstrated that we can improve operating cash flow when government restrictions are relaxed. And in particular, we saw that with the opening of the U.S. border in November. Steve said before, but Iberia's operating profit with an 8% of margin in the fourth quarter is probably one of the highest that you can see. It demonstrates that where we can fly, we are going to come back to the levels of profitability that we had before with all the effort we are doing transforming the company. And I want to congratulate also Iberia people because the results are very impressive. As I said before, the Omicron has not affected the bookings for the rest of the year. We had the effect in January and February, but Easter and summer we see a strong recovery. The liquidity at the end of 2021 of 12 billion euros was the highest that we have for IEG. And as I said before, we continue transforming the business to emerge stronger and to have an structural advantage post-pandemic. So thank you very much for listening, and now we answer all your questions.

Thank you very much, Luis, Steve. I forgot to mention at the beginning of the presentation, we also have the CEO of IHE Loyalty here, Adam Daniels, Thank you. And CEO of IAG Cargo, David Podolsky. So if you've got any questions in those areas, that is helpful. David and I have the mic, so.

Thank you. It's Jared from UBS, and good to see everyone. And Steve, thanks for everything. I imagine being a CFO of an airline over the last two years must be very pressured. I'm going to actually direct my questions to you as we're going away present. Your liquidity is high. The balance sheet did a bit better than I guess analysts and investors were expecting, but obviously you've got this additional capex. How are you thinking about things now in terms of natural de-gearing that balance sheet versus maybe fixing it up through other sources of capital, especially equity? Secondly, pension deficit is probably one thing which is working in the favor of companies at the moment, which is rising rates. Can you give an update, A, in terms of how you see things from a balance sheet perspective, but also the BA annual review thing, or tri-annual review? And then just lastly, inflation, and specifically around employees, who've obviously made a lot of sacrifice. How do you see this ramping up over the next one to three years as profitability is restored. I did see that there was a relatively sizable movement in employee incentives, but I'll leave it at that. Thanks.

Thanks, Jeff. That's a lovely leave and present. In terms of the balance sheet, and you mentioned equity as well, as you say, we have a very strong liquidity position. which is encouraging. We don't have any plans to raise equity, to be clear. Our liquidity is strong. You look at our debt maturity profile and it's very stable all the way out to 2026. Do we have issues not being investment grade? No. We didn't become investment grade as IAG until 2019. We started paying dividends in 2015. So Although we'd like to get back to investment grade, as I said many times, we're not in a rush to do so. We can still finance our aircraft and we can still operate very effectively. In terms of the recovery, as you know, 2019, our EBITDA was $5.5 billion. We're a very cash generative business when we're running at normal levels. So the ability to naturally de-lever is clearly one that we're thinking about a lot and considering And it all depends to some degree on how fast we recover. You know, we can't give you full year guidance this year because there's still too much uncertainty. So no plans to raise equity. Strong liquidity. The balance sheet is not holding us back from doing what we need to do. So that's the position at the moment. With regards to your question on pension deficit, so the next triennial valuation date is March 21st. So we need to have concluded this under the regulatory timetable by the end of June this year. So those conversations are ongoing with the pension trustees. So I don't want to get too much into the detail. Clearly, there's a number of factors in play at the moment. There's been some good asset performance, particularly the other side of March 21, actually. So that's interesting. As you say, maybe the outlook is for interest rates to be higher. But as with all these things, there's always a but or an if. And the but would be the RPI reform. So there's now CPI-H as the new inflation measure from 2030 onwards, which will have a negative impact because asset performance that's linked to inflation will be lower. So we're working through that at the moment over the next three years. What I can say is the 2018 valuation that we did has stood us in good stead. We put in an overfunding protection mechanism on that, and as a consequence of that mechanism, we've not needed to pay deficit payments during Q4 and during this year so far. But that was under the old assumptions, and what we're doing now is agreeing a new set of assumptions. So we'll see how that plays out. I do expect there to still be a significant deficit because of the RPI reform, but I think we continue to make good, solid progress I'm still very pleased that we closed the pension scheme down to future accrual a few years ago because it means you've got a far more contained position. And in terms of employee costs, probably the key thing I would point out is even with what we did at British Airways the other day, we're still expecting from the other initiatives that Sean has put through and the work that was done in 2020, we would still expect the BA employee unit costs to be below 2019 levels when we get out to about 2024. So, you know, it's clearly there's a lot of inflation pressure, probably more so than we were anticipating a year ago, but in reference to the employee unit costs, I still see us being below that.

I think it's important, one comment about that, is we don't have at group level a centralized model for... for people in some way for labor relations. So I think in every country we have a different situation. We have different CBAs, we have different , we have the different response to the crisis, different inflations. So what we consider is because of all the effort that our people have done during this crisis, we are trying to design a model that the people, they can be rewarded also in the recovery. And that's what we are trying to do in the different operating companies. I missed the question.

Morning. Luis and Steve. Jamie Robotham from Deutsche Bank. Thanks for the helpful presentation. I've got three, two for Steve and one for Luis. Steve, the first two are sort of follow-ons from Jared. On the CapEx, presumably we should view the 3.9 billion as a gross figure. There's been... There's been at least one article in the press in the last 48 hours suggesting the group could be looking at asset disposals. Is there anything specific or in the normal course of business that the group could do in 2022 that might mean that net capex is a few hundred million euros below the 3.9 billion growth? First question. Second one, sorry, is to come back on the pensions. So just to be clear... We probably don't need to pencil in any cash contributions in the first half, because it's unlike the mechanism will carry on until you have the triennial review outcome in the spring. But presumably, there could be the need to contribute in the second half. Perhaps you could clarify. And then, Luis, apologies, but slightly predictable question. Could we get an update on Europa, please? Thanks.

So on the CapEx, on the 3.9, We would probably anticipate doing a number of sale and lease back transactions. And I think that would probably reduce gross capex down to net capex, probably down to about 3.4. But what we did do, as you can remember, Jamie, at Capital Markets Day, I tried to move away from this concept of net capex because I felt it was obfuscating what we were doing and the cash generation which was there. which is one of the reasons why I've said that overall I think we can finance 2.3 of the 3.3 billion of aircraft. In terms of pensions, I think that's... Apologies.

What about non-aircraft related disposals? PPE, I don't know, loyalty programs. The article I referred to speculated on a whole range of things that the group could try to monetize potentially. Is that pure speculation or is there anything to be done there?

Well, it was fun seeing the article because obviously over the last two years and going forward as we come out of the pandemic, we review all the options. You know, we've been negligent not to be reviewing the options. So, you know, from that perspective, do we look, are there other options and possibilities? Yes, there are. But that's business as usual. You know, we've got a new strategy director. We've got a transformation officer. You know, are we looking at all the options? Of course we are. but nothing firm to say. I don't know if you want to answer that.

No, I agree. I think it's our responsibility to analyze all the things that we can do in order to maximize the value for the shareholders, and that's what we are doing.

Pensions. I thought I answered the pensions. Did I not? Oh, first half. You're right. No, I think that's probably a safe assumption that probably in the first half we won't. but we'll have agreed a new deficit recovery plan, hopefully by the regulatory timetable around June, so we would then start to make payments again under that new plan.

Europa. Yes, Europa. So you know that this has been on the table a long time ago. It only started November 2019 when we reached an agreement pre-COVID. We needed to adjust the agreement because of the different circumstances that we have And last December, we decided to abandon the deal. And in the way it was structured, we considered that with this contest, it didn't make sense. And we started a negotiation period to try to find a way to do the deal, considering also the huge amount of debt that they have from the Spanish government. So we have been working in that because we consider that the best for Madrid hub is is to do this operation. I think it's going to have, if it happens, a strategic value for all the traffic to Latin America. I think customers will have much more opportunities if we can do this operation. Unfortunately, the last information that we have is that Europa is considering other alternatives from other European carriers. I cannot tell you more about that. As I said, I think it's a mistake for the Madrid hub, for Spain, for the future even of the South Atlantic traffic, but that's where we are.

Thanks, Luis. You guys got back into the old habit of asking three questions. Can you just keep it to a maximum of two to give others a fair chance to ask some questions? And then if you do have more questions, we can do another round at the end. Thanks, Anthony.

This is Satish from Citigroup. On CapEx, Steve, you mentioned actually about $2.3 billion in finance during your presentation. If you could actually give some color, is it like a funding arrangement that has already been agreed, or is it something that you need to work towards as you go into 2022? Just related to that, how should we think about the delivery of those 25 aircrafts into 2022, i.e., how the CapEx would be phased out by quarter in 2022? And second one is actually around the cost in terms of ramp-up. So you are going from 60% to 90% in capacity from Q1 to Q2. So are you going to see more ramp-up cost in Q1, or is it kind of all factored in Q4 itself? Yeah, thank you.

So in terms of CapEx, I think one of the things that's been interesting over the last two years is throughout the pandemic, we've still taken a lot of aircraft and we've been able to finance aircraft all of them, even at the worst points of the pandemic. In terms of going into 2022, as I say, I'm confident that we'll be able to raise the 2.3 financing, which is what we're planning on. Actually, we did a WTC transaction in the second half of last year for $785 million. We've used 100 of that due to deliveries in half two. The other $685 million carries into 2022, which will fund a number of those aircraft. In terms of the profile, it will be broadly flat, quarter on quarter, so fairly uniform. But I have to give you a health warning on that point. One of the challenges we've had during half two of 2021 is a lot of aircraft delivery delays. And so one of the challenges and one of the reasons we haven't tried to give you CapEx guidance for 2023 and 2024, it's very difficult to be really assured as to when this capacity is coming. So I'll give you a big health warning on that particular point. On your second point, with regards to ramp-up costs, I think that is a fair assumption. We do expect Q1 to be challenging from a cost perspective because we will be ramping up severely on a much steeper slope than maybe we'd have thought of six months ago because of Omicron, introducing a lot more capacity. So that will add to training costs and engineering costs. So I think that will drag Q1 down to some degree. Maneeba.

Thank you. Maneeba Kiani from Bank of America. So the first question to Sean may be on the bonuses that are being paid out at BA and How have you thought about it? If you could just talk about the rationale on that following some of the cost reductions that have happened during the crisis. And then secondly, just going back to that bookings improvement chart that you'd shown, from a pricing perspective, what are you seeing? Where is pricing looking based on these bookings compared with pre-crisis levels? And the inflationary pressures that you're seeing, do you think you can pass those on?

Okay. Okay, if I go first, the first thing to point out is British Airways is rebuilding at pace, and we'll be recruiting a number of people into the business. We've got two levers of employee cost efficiency. The first is productivity, and that's about two-thirds of the benefit that Steve spoke about. So that's very much embedded as a result of restructuring. The other one-third is driven by contract mix. So a lot of people coming into British Airways will be coming in on market rate contracts, and that increases as we rebuild and increases over time. Now, against that context, we have a UK labour market which is competitive, and we wanted to have incentives in place to attract and retain people into the business as we move forward. So I think it sort of meets those three criteria. We retain our efficiencies, we drive productivity, and we're competitive in the labour market and supporting people to rebuild the airline.

The pricing. To be honest, we see opportunities. I think in the... In the first quarter, we saw that the passenger revenue yield increased. It's true that we are lagging behind still in the lot factor. The combination of that is that the passenger unit revenue was reduced around 14%. But what we see for the 2022 is that... we continue improving the low factor and we see opportunities to increase the unit rest. For example, in North America, I said before that Norwegian, they have left the market. So we are going to have less non-premium seats in the market and we are going to have an opportunity there. Premium seats is true that they are increasing and we are, because of the retirement of the 747, we are going to have less premium seats in the market, but we consider that the shape of the fleet that we have now for this summer is the right one, because what we are seeing is, for example, that World Traveller Plus is working very well. The capacity that we have for 2022 in the summer is similar to the capacity that we had in 2019. We have increased the average number of seats around the world from 36 to 42, And what we see is that the profitability of the World Travelers Plus is similar to the profitability that we have in Club World, but the profitability per square meter is higher. So when we see the rush for this year and we see the rush for the summer, we see opportunities and we think we can be above 2019 levels.

Hi, morning. It's James Hollins from BNP Paribas. Steve, thanks for everything. Really enjoyed your working with you over the years. Two from me, just on Heathrow charges. Luis, I think previously you said if Heathrow charges got materially, you'd move capacity out of Heathrow. I think they're up over 35% this year. I was wondering where we are in that process and where potentially we could go with H7 coming out middle of this year and whether you'd follow through on that. I know you haven't been quite as passionate as Willie, but I think it'd be good to get your update on that. Secondly, I'd like to hear a bit more from Sean, actually. I appreciate your personal email I had, although I think it probably went to several million executive club members. But it seemed like some pretty transformational stuff there. You're really talking about a new BA. I mean, maybe I'm misreading it, or maybe I read it off for a few drinks or something, but it certainly felt that you're looking at big, big changes there. So I'd love to hear a bit more about what it means for staffing, what the staff reaction was, and really just get your perspective on how you see it playing out. I know product is part of it, but just love to get a bit more from you. Thank you.

Okay, I'll start with Kidro. I think we are clearly disappointed with the CA announcement. I think the amount of £30.41 that we are paying in 2022 until we close an agreement is too high. As you said before, it doesn't make sense that one of the most expensive airports in the world, they have an increase much more above the inflation. So even in the range that they are considering, an increase between 11% and 56%, from my point of view, is ridiculous. But the CIA, they will present the final proposal in April 2022. Also, we have the right to appeal. I think what is not consistent is to do the numbers, considering that this summer we are going to have in Heathrow 50% of the passengers that we had in 2019. When, for example, we are saying that we are going to fly in the peak 90%, and we are one of the main drivers of Heathrow. So even the slot alleviation that you know we have is 70-30. So in some ways, we are considering, Eurocontrol is saying we are going to have more passengers. So we use a low volume of passengers to do the calculations for Heathrow, We use high volume of passengers for other things. And we are worried, not only for the charges, it's because if we can fly the capacity that we expect of 90%, we are worried about our customers. Because if they are resourcing the airport for 50% of the capacity, we are going to have long queues and the customer experience is not going to be good. So I hope they are going to prepare the airport for the capacity that we are going to fly this summer.

If I pick up the second point, yeah, there's a lot going on at BA, and I think what we wanted to do is talk about how we're redeveloping our strategy. And I think, look, ultimately it's very similar to what we've always done, which is to connect Britain with the world and the world with Britain. But probably a number of things underpin that. The first is leadership and leading in London. So we know we have a very strong hub at Heathrow, you know, more OND passengers coming in and out of Heathrow than any other international gateway. We also have the largest number of premium passengers travel on our flights. In 2019, more people flew in premium on BA than any other carrier. So premium proposition is kind of stating the obvious. It's where we want to position ourselves, and it's the segment we want to serve. That isn't just about first and club. It's about differentiation no matter where you fly. You know, exciting products in World Traveller Plus and the changes we've made to Shorthall. I think we want to be customer intimate. So to be customer intimate and give great service, you need colleague centricity. So a lot of what we're doing is talking about colleagues, listening, rebuilding, and making sure that we deliver a consistent service proposition. To kind of underpin that internally, we've launched a program called A Better BA. That's really galvanizing engagement, and we're getting out and working very closely with the frontline to deliver it. In terms of leadership as well, other exciting things, Gatwick is exciting. We have a new AOC. We have a new platform. We fly to 35 destinations this summer. unit costs will be significantly lower than we had, and we're able to compete in a very different market to Heathrow head-on with the people who operate down there. And again, the signs are very encouraging about the enthusiasm for the Gatwick operation. Sustainability is a very important part of it, and not just about the carbon aspects of sustainability, but diversity, inclusion, and representation, and we're very, very committed to that. So, you know, we're working very hard on it. We're conscious of the task ahead of us, I think your letter also acknowledged some of the things that we have to fix. We are modernizing our contact centers. We're halfway through rolling out a new telephony system and we're building up resources in our contact centers to cope with what is an increase in average handling time because people are changing plans a lot. They're rebooking a lot and the average time they're on the phones is longer. We didn't want to ignore that. We wanted to tell our customers that we have an issue to deal with. We're dealing with a true resources and technology. So, you know, it's early days, but that, in essence, is kind of the framework we're working on, and it's fair to say that it's galvanizing the organization in a very positive direction.

Thanks. Alex Loving from Bernstein, so two from me, please. First of all, if you could give us an update on your outlook for business travel, how you expect that to develop during the course of 2022, where we are on bookings, any subsegments that are performing better or worse, comments from customers, that sort of thing. And then secondly, on leisure, can you please talk a little bit about the impact of inflation on your leisure consumers? So household budgets are squeezed with increases in inflation in prices of fuel and food and that sort of thing. Do you expect that to drag on leisure demand for customers to maybe switch from long haul to short haul, which maybe impairs your demand a little bit? If you could speak to that, thanks.

So about your first question, what we see in the business channels is that they are recovering. Right now, they are around 56% of the capacity that we had in 2019. And we see, like every week, we are improving around 7 points, that amount. But apart from the business channels, what we see in our premium cabin is that the load factors and the yields we are having right now are similar to the lot factors and yields that we had in 2019. It's true that the mix is different. We have more people flying in premium leisure and less people flying in business, but we are improving both premium leisure and business, and as a consequence of that, the mix, the final output is, as I said, same yield, same lot factor that we had in 2019.

So maybe you can answer that. So on the intakes that we're seeing across the cabins are very encouraging. And what we're seeing is, if I use BA as an example, is every week at the moment we're seeing the revenue intakes being ahead of the booking intakes. And if those trends continue, I would expect, as Luis said earlier, for our RASC to be ahead of 2019 levels by the time we get to summer. That's true not just on the business channel that Luis just referred to, but it's also true on the direct channel and on the leisure channels as well, in fact, to some degree more so. So actually, at the moment, things are setting up very well for a strong summer and a strong pricing environment from everything we can see at the moment. So it is encouraging.

Hi, Nadine from Goldman Sachs. Thank you very much for your presentation. Two for me, please. So firstly, just on cash, really helpful guidance on CAPEX and pensions. Are there any one-off costs to look out for in 2022, maybe from refunds or anything else? And then secondly, just in terms of the North Atlantic. So you said that you expect total industry capacity below 2019. How much flexibility is there to reroute capacity from other long-haul routes, for example? I'm thinking particularly Asia, which is quite depressed, onto the North Atlantic.

Thank you. So on the cash question, yeah, in terms of working out what the working capital will do, because as you say, I've probably given you decent guidance on the rest as best I can at this time. I think what I would expect in... 2022 different to 2021 is I would expect it to be more normal. And what I mean by that is I would expect there to be a buildup, particularly sales in advance of carriage, et cetera, in the first half and maybe in the second half for it to then start to reduce to some degree, which is typically what you would have seen, but is not what we saw in 2021. So I think that will be part of the play. And I think the other challenge, and this is an unknown for all of us to some degree, is how will the voucher balance unwind over time? We've probably been pleasantly surprised how slow that's been to unwind to some degree. Clearly, some of that will redeem in 2022. But what we have done as a business is pushed out those expiry dates so there's not a rush for people to redeem them. So I think some of that will go into then into 2023 and possibly beyond 2022. And dare I say, I suspect there will be some degree of breakage in there. The other good thing about the vouchers is what we see is somewhere between 25% to 30% of spend on top of the vouchers. So people almost treat them as a sunk cost and then put more on the table as well. And we see that trade up in the tune of about 25% to 30%.

About North Atlantic, I said before that the capacity that we are not flying to Asia We are putting in North Atlantic, and that's the reason we are going to reach 100% of the capacity. What we see in the market is that the total capacity is going to be increased in premium by around 1%, and in non-premium it's going to decrease around 8%. We are going to have more market share in the non-premium, where we consider, as I said before, the World Traveler Plus. And in the premium side, it's true that we are going to have reduced market share as a consequence of the grounding of the 747s, where we have more first and business seats. But in general, the dynamic that we see there with this competition, Norwegian leaving, JetBlue entering, and others adding more capacity, is that we are going to have opportunities of pricing, and we don't see now the necessity to put more capacity there.

Hi, good morning. It's Vashika Sojourney from Barclays. Just in terms of your comments about premium leisure, I'm interested in understanding kind of why you think that has been so strong. Do you think it's temporary and related to COVID or do you think it's something that can sustain and that momentum and premium leisure can continue? And then my second question is just on CapEx. Going back to the slide that you presented earlier where you showed, you know, the CapEx budget kind of pre-COVID at the CMD and the CapEx budget now. I think it was about 7.5, maybe 8 billion difference in those two numbers. Given that you've not had any cancellations, do we assume that that remainder needs to be spread over the next four or five years? And is that kind of how we should be thinking about CapEx post this year? Thank you.

Okay, I think about the first one, maybe Sean can expand more on that. But what we see is the customer behavior is changing after this crisis. We see that we have more people that they are ready to pay more. And that's the reason we see that premium less sure is increasing in a very important way. We need to take into consideration new ways of working. You have people that they are traveling and they can travel for the Caribbean for one week or 15 days. And I think that something is helping to change the behavior of the customer. Also, we have customers that now they are ready to pay more money to have more space after this crisis. So we are following all that, but the consequence, I think, is not going to be in the short term. We see a change in the behavior, and the premium leisure is going to be very important for us. I don't know, Sean, if you want to add.

Yeah, probably a couple of things to add to that. Consumer balance sheets are very strong, and we see that in the premium leisure segment. I think there's a terrible expression to describe this combination of business and leisure. Pleasure, I think somebody's calling it. But you do see people take longer trips when they're doing VFR. They're combining a week of work with a week of visiting people. And that's a new segment. And I think we're well positioned to capitalize on it. The average seat count per plane we'll have in premium economy will be up 17% over the Atlantic this summer. That gives us two opportunities. One is trade up from economy. And we actually see people do that a lot. And secondly, if people are a bit more price sensitive, it's a very good net when they trade down. But overall, I think other indicators we have, like BA holidays, very strong. You know, we're about 30% ahead of where we were in 2019 on BA holidays bookings at this point in the cycle. and that's a very good indicator. I think how long that consumer spending strength continues, it appears to have a fair bit of momentum. If you look at some of the data we're seeing out of credit card companies, some of the analytics out of some of the people who are monitoring this in the U.S., we think that leisure segment is going to be robust for quite a while yet.

And on your other question on CapEx, I think the quick answer to that is yes. I would spread that over the next four or so years, I think that would probably be the right way to deal with it.

Alex Patterson from Peel Hunt. Steve, enjoy your rest and good luck in the future. Just one question from me. Do you need to own a loyalty business?

I think... I'll jump on this one. I think the answer to that is yes. I think we have seen... Historically, one or two other airlines sell loyalty businesses and then attempt to rebuy them because they've realized that their loyalty business has a huge strategic asset, which is this very rich customer data. So from that perspective, I think it's essential that you retain control of it. Similarly, how you address that customer base, particularly if you're focusing on premium sectors, et cetera, is really important. So I think... To control and to own the loyalty business is key, and we've seen a number of people go in the wrong direction with that and then try and reverse it. But I'm sure both Adam and Luis might have comments on that.

I fully agree with Steve. I think that the loyalty business, for example, during these crashes has been very important for us. We have engaged more with our customers. I think to have control over loyalty And that important customer database where we have all our premium customers, I think it's very important for us. So I think it's something that we can exploit and develop, and that's what Avan is working on. Maybe you can comment on that.

Yeah, I would say that you're probably also going to see some stronger relationships between businesses, and that's what we've announced this week with the Qatar relationship. about integrating more closely between them. And that's good news for customers because it's more places to redeem, more places to collect. It's good news for the loyalty business because the currency becomes more valuable. It extends our global footprint. And it's good news for the airlines because if there's more places to redeem, if the currency is more attractive, then loyalty becomes much more likely and you're going to get more share of wallets. So I think The close integration between schemes is what's going to happen. That's, I think, one of the things that's going to be driving the business going forward.

Thanks, Adam. Any more questions? No? Okay, well, thanks, Louise and Steve, for your presentations and answers to questions.

Thank you very much.

And thank you, everybody, for coming along.