International Consolidated Airlines Group S.A.

Thank you for standing by. Welcome to the first quarter 2024 International Airlines Group Earnings Conference Call. At this time, all participants are in listen-only mode. After this speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star 1-1 on your telephone keypad. You will then hear an automatic message advising your hand is raised. To resolve a question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Luis Gallego. CEO, please go ahead.

Thank you very much. Good morning and welcome to the IAG trading update for the first quarter of 2024. With me today are Nicolas Cadbury, as well as members of the IAG Management Committee. I am pleased to announce that this has been a very good first quarter for IAG. We have seen a strong demand in most of our markets, and in particular, our three core markets of the North Atlantic, South Atlantic, and in Europe. This has driven increased unit revenue versus same quarter last year in the North Atlantic and Europe and supported the high-capacity investment we are making in Latin America. This has been helped by good Easter holiday training. As a result, our revenue has increased by over 9% to 6.4 billion euros. And we have delivered operating profits of 68 million euros, a 59 million euros increase compared to the first quarter last year. We are continuing to invest in our businesses to deliver customer and operational benefits that will sustain best-in-class margins over the long term. Unique costs were, as we expected, so a little bit higher in the first quarter than they will be for the rest of the year due to the timings of this investment. We are already seeing the benefits, in particular, in V8's operational performance. Our balance sheet continues to strengthen at 1.3 times leverage compared to 2.1 times at first quarter last year due to our strong performance and focus on free cash flow. And finally, we are well positioned for the summer. On that note, I will pass you to Nicolas for more detail about our financial performance.

Thank you, Lewis, and good morning, everyone. In this section, we will view the financial performance of IAG first quarter, highlighting the key revenue and cost drivers in our strong balance sheet. I'll start with the profit bridge, walking through both the drivers of the improvement in profits since last year and then the results by each operating company. On the left on this slide, you can see the increase in revenue has been the biggest profit driver, combined with the increase in capacity with strong unit revenue growth and benefits shifting from the timing of an early Easter. Cargo revenue was down on last year, which was when we were seeing high cargo demand due to the supply chain disruptions in the market. Non-fuel and fuel costs reflect the higher level of flying activity in the air. On the right that you can see, All of our airlines, except for Aer Lingus, have improved their profit year on year, which I'll come back to later. This page shows our key metrics for quarter one. We continue to invest in our network, increasing capacity by 7%. At the same time, our passenger unit revenue, or PRASC, increased plus 4.4% compared with last year, with our load factor up 1.6% and our yields up 2.4%. All our airlines saw an increase in their P-RASC with the largest increase at Aer Lingus and Welling, both of which have a high mix of leisure passengers. And non-fuel costs increased by 3.7% in line with our expectations for the quarter, but higher than our expectations for the full year. This higher Q1 reflects the timing that employee pay deals, recruitment, aircraft deliveries and inflation materialised last year. For the full year, we continue to be confident that non-fuel casks will increase in line with the guidance we gave in March, up slightly on last year. These revenue and cost metrics have delivered another profitable first quarter, generating 68 million euros in operating profit, which is 59 million euros improvement year on year. We further reduced our net debt to 7.4 billion euros. with leverage at 1.3 times EBITDA, significantly lower than the end of last year and compared to Q1 last year. These results continue to demonstrate the strength of our business and brands, coupled with our unique disciplined approach to capital allocation and our transformation initiatives. This slide is a breakdown of performance by business, with most of our businesses delivering an improved profit performance during the quarter. Aer Lingus is highly seasonal business, and typically makes a loss in Q1. Capacity grew by 4%, but the loss remained broadly flat year-on-year, with a small improvement in operating loss margins. British Airways' profit increased to £22 million, driven by the strength in the North Atlantic, and Iberia built on its performance last year by delivering another record profit in the quarter, reflecting robust market demand in their core Atlantic and European markets. Welling was the standout year-on-year performer. Welling delivered a strong revenue and cost metrics in the quarter driven by the high exposure to loads of traffic and again benefiting from the timing of Easter. Lastly, our loyalty business also built on the strong performance last year by growing profit to 80 million pounds showing the benefit of their non-seasonal business model. Turning to our revenue performance, this slide shows our revenue performance in terms of capacity, and passenger unit revenue. Overall, we saw strong demand in the corridor, driving high revenue and an increase in unit revenue across most of our geographies. We're particularly pleased with the performance in our core profit pool markets of North Atlantic, Latin America, Caribbean, and Europe. In the North Atlantic, we had an improvement in unit revenue growth compared to Q4 last year, with all our airlines seeing an increase in unit revenue on last year. Given its relative size, the improved performance was principally driven by British Airways, which saw strong unit revenue growth on broadly flat capacity, benefiting from both business and leisure volumes growing ahead of capacity in the quarter. Latin America and the Caribbean performed very strongly. Our investment in the region saw capacity increasing by 14%. This level of investment typically takes time to mature, but robust market demand, particularly from visiting friends and relatives and leisure segments, drove only a slight reduction in unit revenue performance. Our capacity was broadly flat in Africa, the Middle East and South Asia, but we saw a 4% decline in unit revenue, largely reflecting the ongoing conflicts in Israel and Gaza and competitive capacity growth in India. Asia Pacific, which is only around about 4% of our ASKs, saw the largest capacity growth with British Airways continuing to recover to 43% of IAG's pre-COVID levels of capacity. The unit revenue declines in this market, reflecting the timing of re-entry markets and weakness in demand of China. Our short-haul geographies performed particularly strongly in the quarter, with strong leisure demand and a good Easter holiday period. In Europe, all our airlines except Welling grew capacity to satisfy strong demand and all our airlines increased unit revenue in the quarter. Routes to Italy, France and the UK were particularly strong performers. This next slide shows our results after tax with a loss of €4 million. This was an improvement year on year at both pre- and post-tax levels. I would just highlight the tax line where the benefit from a one-off exceptional tax non-cash credit of 89 million euros relating to a constitutional court ruling in Spain earlier this year. This court ruling allowed our Spanish businesses to be able to recognize higher previous year's tax losses. This chart shows our balance sheet and liquidity positions. As you can see, our balance sheet remains strong with a reduction in both net debt and leverage, affecting our strong performance and positive seasonal working capital flows. CapEx guidance, which, as a reminder, is gross, not net CapEx, remains unchanged at €3.7 billion for the full year 2024. And I wanted to highlight that next quarter sees a peak in our aircraft deliveries, with quarter two accounting for around about seven of the 21 aircrafts delivered in the quarter. To conclude, we are pleased with the operational and financial performance of the business, and we have strong conviction in the future free cash flow creation of the group this year and beyond. And at that point, I will leave you now in the hands of Luis.

Thank you, Nicolas. I will now briefly talk about some of the strategic initiatives that our operating companies are carrying out that will help us to achieve our financial and non-financial objectives in the medium and long term. As always, these are focused on our strategic framework of strengthening our core, including strengthening our global leadership positions and strengthening our portfolio of world-class brands, driving earnings through our asset-like businesses, and operating under a strengthened financial and sustainability framework. Erlingus continues to focus on its unique North Atlantic position, building to 21 destinations in North America, with a return to Minneapolis last month and adding Denver later this month, as well as broadening its short-haul network of popular European destinations. As mentioned earlier, British Airways is at the forefront of our customer and operations investments. They continue to recover their long-haul network, such as their recent return to Abu Dhabi, as well as their returns to Bangkok and Kuala Lumpur this coming winter. And their transformation program includes investing in new digital systems that are already helping to deliver improvements. Iberia are continuing to build on their recent strong performance. Their capacity investment is very focused, in particular by adding frequencies to core cities in Latin America, as well as in the European and domestic show-hold network. They also continue to drive improvements to customer proposition, such as customer assistance and improving food and service on board. Welling's network strategy is still to de-seasonalize the schedule to winters and destinations, and mainly through aircraft utilizations. As you could expect, they are focused on improving the way they serve their customers in an efficient but helpful way, such as through self-service disruption technologies. And finally, loyalty continues to focus on maximizing its earned and burned value proposition, as well as expanding the number of ways you can earn Avios, such as from Finnair flights now. It is offering members more ways to redeem them. The transfer of VF Holidays to loyalty will be a key driver of value to both our customers and IAE's airline brands. And the outlook. We strongly believe that growing demand for travel will continue to be a long-term positive trend as we are seeing this year. So we are well positioned for this summer. As we invest in our core Atlantic and European markets, our plans continue to be to grow our overall capacity by around 7% in ASKs. Our investment in customer and operational benefits, which will allow us to maximize the benefit of a strong demand, means that we continue to expect non-fuel unit goals to increase slightly this year as previously guided. This obviously means that it will be better for the rest of the year. As mentioned at Puglia Results, one of our key objectives is to generate significant free cash flow, which will allow us to maintain our strong balances and to invest in the business. We remain focused on our strategy to deliver world-class margins and returns. And we are also committed to sustainable shareholder value creation and cash returns. And now we hand over to Q&A.

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 11 on the telephone keypad and wait for a name to be announced. To withdraw a question, please press star 11 again. To ensure everyone has the opportunity to ask a question today, please limit yourself to just two questions. Please also ensure that you are close to your microphone and not on the loudspeaker. This will help with ensuring that your audio is clear and your question is understood. Thank you so much. Please stand back. We'll compile your clinical studies. We'll take a few moments. And now we're going to take our first question. And it comes from the line of Peter Lovenberg from Berkeley. If your line is open, please ask your question.

Good morning, guys. Can I ask, please, about the industrial relations situation at Lingus, Whaling, and indeed in Spain, where your structure of the scope agreement with IBO Express, I think all those things were in play when we spoke at the full year results. And then my second question would relate to the BA improvement plan. And could you update us, please, on how you're going with the on-time performance? and the net promoter scores at BA.

Thank you. Okay. Good morning, Andrew. So, in that you know that we don't deal with this at group level, so maybe it's better that the different CEOs, they can answer where we are. So, Lynn, please.

Yes. Hi, Andrew. We've got, as you know, talks going with our pilot community with iAlpha. went to the Irish Labour Court over the last few weeks. So we're still in process. We haven't heard back yet from the Labour Court.

And then we'll take it from there.

Hi, Andrea. This is Carolina. So we have started engaging with

at this point and are having constructive discussions. So, yeah.

And also in IBE and IBE Express constructive dialogue with both representatives to work on the future.

And talking about VA, I think the improvement is real. The punctuality for the first quarter was close to 80%. So it's very similar to the functionality that was passed in 2019. NPS is also going up, and maybe someone you can expand on this.

Yeah, Andrew, I think the other kind of backdrop is that while we've been driving punctuality, we've also been expanding the airline. So we had 10% more passengers in the first quarter, about 5% more ASKs. And as Louis said, that's a 19-point improvement in on-time performances. I think it's better than some of the similar hubs that operate in similar environments to us, so we're very encouraged by that. And we also have a number of initiatives that we'd implement over the summer that will help build on that strong purpose that we've made over the first quarter. So encouraging, you know, despite the fact that, you know, some days we've had a lot of external challenges that we've had to navigate through.

Cool. Thank you very much.

Thank you. Now we're going to take our next question. And the next question comes from James Holland from BNP Paribas. Your line is open. Please ask your question.

Hi. Good morning. Thank you. First, Nicholas, I was wondering if you could, most obvious question, give a bit of chat on Q2 quite soon. Maybe your view on Q2 consensus at 1.1 billion, which is down 13% year-on-year. And the second question, probably for Luis, are we still seeing Madrid as the new Miami? Or what were the questions? Maybe some of the left-hand trends, and maybe in competitor capacity, one left-hand would be here. Thank you. Hi, James. Thank you for that. We don't usually give quarterly guidance overall. As you can see, we haven't given full yet guidance overall, particularly on kind of PRAS overall. I think one thing I would say about PRAS is for court to... We talked about actually just the timing of Easter, which pulled some sales forward. So you have potentially to have a kind of softer April as a result of that. We also had a very strong Q2 last year as well, and we're adding 7% capacity. So kind of that combination of strong last year and capacity, you'd expect to have some impact on the UAC overall in quarter two as well. Overall, over the full year, if you took the fuel price it is today, you'd expect more improvement in fuel task over the year, but actually just because of the seasonality, actually it's slightly worse year on year in Q2 as well. So I think that's kind of enough guidance on what I was going to say on Q2.

Madrid, yes, we continue seeing Madrid very strong. So Iberia is starting this year around more than 15% of capacity there, and the rush is performing well, almost flat rush without increasing incapacity. And when we see the growth that Madrid has to LACA is going to have this summer, It's going to continue strong not only because of Avelia, also because of the competitors. We see also a strong premium traffic, investor traffic that we didn't have in the past. Marco, do you want to add something?

Yeah. If we look at all the investments we made in Q1, they are all performing extremely well, increasing capacity that we had in Bogota, in Lima, in Santiago de Chile. And indeed, as you were referring to the sort of positioning of Madrid as the new Miami, really continues. If we look at expenditure of tourism in Madrid, it kept growing. It grew in the first quarter 35% versus 2023. And in particular, the luxury tourism, so the premium economy, and premium travel keeps increasing in a very, very significant manner. So we're confident also that the continuous increases that we're going to do also through the year, we're going to still increase capacity through the year in other Latin American destinations will continue to be performing very well.

And your corporate is up to about 95% to 96%. It's only back to where it was in pre-COVID as well. Yeah, in Latin America, yes. So that's corporate revenue at 96% in Q1, is it? It's about 96% of where it was pre-COVID as well, so it's almost fully recognized as well. Thanks very much. Thank you.

Thank you. Now we're going to take our next question. Just give us a moment. And the next question comes from Harry Gowers from J.P. Morgan. Your line is open. Please ask your question.

Thank you. Yeah, morning, everyone. First one's just on British Airways, if I can. It's obviously early days in the transformation program, but I guess what sort of timeframe are you confident you can catch up that EBIT shortfall versus 2019 levels? And then the second one is on LATAM as well, if I can. I mean, we've seen the US carriers over capacity and then some yield weakness going from the U.S. to LATAM. Is that a specific North America to LATAM issue, do you think? I saw that your pre-rush for LATAM was down a little bit in Q1. Is the competitive landscape from Europe to LATAM a little bit softer?

Thanks a lot. Thanks, Harry. Hi, it's Nicholas here. Just in terms of the timetable shortfall, so what Harry's referring to there is in Last year we had profit at, as I said, 1.4 billion in VA and pre-february we were at 1.9 billion. So we expect to get that back. We haven't given a timetable for that, but given the strength of the market, we'd expect it over the coming next year or two.

Yes. The second question, as I commented before, I think Latin is very strong. We need to take into consideration that we are having around 15%. of increasing capacity, and even with that capacity, the RAS is well above the RAS that we had in 2019, and in line with the RAS that we had the previous year. So I think it's a strong market. Maybe, Marco, you know what you want.

No, indeed. Also, the comparison with 2019 confirms that we are with a high double-digit increase versus 2019. It's a very strong performance.

Thank you. Thank you.

Now we're going to go to our next question. And the next question comes from the line of services from Raymond James. So the line is open. Please ask your question.

Hey, good morning. I was just wondering if you can expand a little bit on the corporate demand. I know you gave that story of the area, but curious, you know, where it is overall and what the trend is, if that's kind of improving or stable, what you're seeing on that front. And then for my second question, I know you kind of know that BA holidays is going to move into Avios. I'm curious what your plans there are and, you know, the reasoning behind that move.

Okay. So first question about the corporate bookings and business traffic in general. We continue seeing a slow recovery. Okay. We had a good January and February, NBA and Iberia, but we had more negative marks, mainly due to the timing of Easter. But NBA, the volume has increased in the first quarter around 5% if we compare with the first quarter of 2023. Revenues and yields are in line, but we see an increase in volumes. And in Iberia, we are in a similar situation, but you know that in Iberia, the volume is around 85% in comparison with around 70% in British Airways. And we know that this is linked also to the number of people coming back to work that is different in Spain than in UK. So I think in general, We have seen also a very strong recovery versus last year in our network to India, and also as we are recovering the network to Asia, we see an increase in business traffic. So in general, we see the trend that we expected, and we maintain the objective to come back to 85% in volume, but it's going to take longer. And maybe, Alan, you can comment on it.

Sure, very happy to. Yeah, in terms of the beer holidays question, we think bringing the two businesses together makes a lot of sense. They're two asset-like businesses that are growing very fast, and we think we can continue that growth and probably speed it up by bringing the two businesses together and working more closely. So as an example, last year we – allowed customers booking via holidays to pay with their RVLs to reduce the cost of their trip. And now we see 20% of all bookings on via holidays using essentially reducing the cost of travel for that. So that's a start of that. We think we have more potential to come and we think bringing the business together makes a lot of sense.

Thank you.

Thank you. Now we're going to take our next question. And the next question comes, Lan, of Seven for Long from David. Your line is open. Please ask your question.

Yeah, morning, guys. Okay, what's not being asked? Can I ask, I mean, you talked about April being a bit quieter, I guess, post-Easter blues. How's Europe going for the peak summer? Just maybe just a general comment on that, presumably because you do mention that the business is, Overall it's become more seasonal, maybe with a bit more leisure and less corporate. Second question maybe just on BA in terms of the traffic flows. Is it still very healthy in both directions on the transatlantic? Are you expecting some stabilization in terms of the very strong demands from west to east? or just general comments on where the passenger flows are coming from. Thank you.

Okay. Good morning. The first question, demand continues to be strong for the Q2 and Q3, and we are well positioned for the summer. So the group position that we have for the Q2 is above 80%, and for the Q3 above 40%. So, in general, we are confident that we are going to have a good summer with the levels of corporate traffic that we are having and the increase that I said before we are considering. And maybe, Strong, you want to comment on the second question?

Yeah, I think we're seeing, you know, as we said, pretty robust demand in the North Atlantic. I think UK point of sale has been very strong. The North Atlantic point of sale hasn't been as strong, but it's actually equally encouraging I think on corporate, we have seen an expansion in the market in the first quarter on the North Atlantic of about 7%. And we see that continuing as we look into the second quarter. So I think that business recovery is also very encouraging. I think the final thing is the capacity into the UK is also moderating as we look into the summer. I think actually Heathrow capacity in the North Atlantic will be flat year on year. So, you know, they're the sort of variables that play, and I think they play to the kind of strength that we've been talking about earlier. Thanks, guys. Thank you.

Thank you. Now we're going to take our next question. Just give us a moment. And the next question comes from Saseesh Sivakumar from Citi. Your line is open. Please ask your question.

Yeah, thank you. I've got two questions here. First on the premium segment, can you actually give some color on, like, how the segment has performed, whereas the load factors are, because last time, in fact, the load factors are up on the premium segment, and also the booking, booking term works within the segment. And the second one is around the staff cost. If I look at cookie one, it's probably up 6.8%, obviously. related to VHD, but how should we see that evolve? Thank you.

Okay, so the first question, it depends on the different airlines, but for example, in British Airways, one sector that is performing well this year, well, one of the weakest last year is IT technology, so they have an increase of 25%. in revenues versus the first quarter in 2023. Entertainment is also high levels. Energy. And the ones that are still lagging behind is banking and finance, pharma, and education. So but that situation is a little different if we look at Iberia, for example. So they have a strong sector in government and retail. But the others are still lagging behind. And the second question?

The second question was about just kind of cost outlook overall. So we said that non-fuel cask was up about 3.7% in Q1. And within that, employee costs were up 6% overall. And we still hold with our guidance that we're going to be up slightly in terms of our full year non-fuel caps, so therefore it's going to improve as we go through the rest of the year. The reason for that in the Q1 was just about timing of when we did our pay deals last year, which was potentially in Q2 and Q3 last year, so we just had a bigger jumping cost in Q1 overall. So we don't give guidance by individual cost line, but we'll hold with our overall guidance overall. Thank you.

Thank you. Now we're going to take our next question. And the next question comes from Jared Castle from UBS. Your line is open. Please ask your question.

Thank you. Good morning, everyone. So, firstly, just on air Europa, I mean, where do things stand? And, you know, in very broad brush terms, are there any red lines where – you know, if you have to give away too many concessions where you just kind of walk away from the offer. And then secondly, I mean, you mentioned kind of shareholder returns or capital returns, but, you know, in terms of a roadmap, how close are we before you do something or what are you looking for before you kind of reinstitute some ordinary dividend, et cetera? Thanks. Thanks.

We continue working with the European Commission. After the stop of the clock, we have continued collaborating with them and now we expect to have a solution for the deal around July if we don't have more stop of the clock. And yes, we are working with different options, different remedy takers in order to address the The concern is that the Commission can have, for sure, can have the option to walk away if we consider that the remedies are above what we think makes sense for the group. But I think we are still in the middle of the process. I think we are progressing well, but until July, we are not going to know anything new.

Okay, just in terms of the shareholder returns, and it's really just the same message we gave at the year end. You said we were focusing on three key areas. One was to make sure we maintained our strong balance sheet, and you can see we had leverage at 1.3 times at the end of the quarter, and we talked about strong trading. So I hope we maintained our strong balance sheet. We talked about securing our capital. Done. And the thing was to get back to paying dividends as soon as we possibly can. What we said at the year end is we said we continue to see the sales momentum as we did at the end of last year going on, that that would not be far off. So it's a board decision, so I can't give any more granularity of that. But we're in our, you know, shareholders, our leverage and our balance sheet is in a good place. So when we get ready to do so, we'll do so with confidence.

Okay. Thanks a lot.

Thank you. Now we're going to take our next question. And the next question comes from Guillaume Samparo from CaixaBank. Your line is open. Please ask your question.

Hello. Good morning. Thank you for taking my question. The first one, if you could provide us your thoughts on some pricing trends across Europe. And second, is there any kind of quantification that you could provide on the Easter impact on unit revenues in Q1? Thank you.

So is that traffic trends across Europe?

Is that pricing trends?

Pricing trends. We tend not to go into kind of individual pricing trends in the individual markets overall. You can see across Europe overall that in Q1, we had kind of a good growth in ASKs. We had 9% growth in ASKs, and our P-RASC was up just under 6% overall. So it just shows you the trends of the local market overall. And the second question was? Oh, you said, yeah. So, yeah, we're not going to quantify the kind of . At Easter, and the reason for that is there's lots of moving parts, not just Easter, but also the timing of investments that we were making in the business, but also kind of when the inflation hits as well. So I think it'd be misguided just to kind of give you a number just for Easter overall. But as we said, it means we had a particularly strong March and a little bit of a weaker April as a result of that.

Excuse me, Dion, any further questions?

No, just one question. I was referring more to the summer, not specifically to Q1.

Yeah, no, I got that as well. But we don't give individual pricing guidance, PRAS guidance. And what we said, I can give you, as we said earlier on, is we're seeing strong capacity growth across the business overall and we had a strong summer. So both of those things together is going to impact PRAS overall. But overall, we're seeing good demand. So it's bouncing those two together. But we're not going to give individual guidance on PRAS by region.

Thank you very much.

Thank you. Now we're going to take our next question. And the next question comes, Lan, of Alex Ewing from Bernstein. Your line is open. Please ask your question.

Hi. Good morning, and I hope all is well. Two from me, please. First on unions. So one factor that's helped you for a while has been that competition between your own group airlines for investment. But now you're seeing the pilot unions in the UK, Spain, and Ireland teething up by selling an inter-union alliance. Do you expect that to reduce your ability to compartmentalize your unions and spur that competition between the group airlines? And more generally, what impact do you think it has, please? Second question is on technology. So, you can see that VA contracted in the last quarter. What benefits do you expect it to bring versus your existing technology architecture on both the revenue and cost perspective, and how significant would you expect those to be, please? Thank you.

Okay.

Your first question. The model we have in the group is that we negotiate locally the labor agreements, and we have different labor agreements depending on the different characteristics of the airlines, the different markets they operate, the customer segments, et cetera. So right now we have close agreements. with a major part of our people. We talked before that we are still waiting the agreement with Erlingut pilots, Boeing pilots, and Marco is working also to have an agreement between Averia and Averia Express. But everything is different, so I think from the group perspective, that's the model we are going to continue, talking with our labor representatives locally and trying to close the rest if possible for the future of the employees and the business.

I think we outlined our vision for transforming our digital experience at CMD and fair to say that we're advancing on that road. I think picking a technology partner with Amadeus and Nevio for us makes sense because I think there's a lot of experience and capability already built that we can adopt because some of this kind of capability we are using has also been tried with other airlines. In terms of the benefits that we expect to see, well, one, I think we'll be able to price our inventory a lot more dynamically today than we do in the past. I think, two, we'll have much better merchandising and retailing capability, you know, much more enhanced shopping back to functionality for users. Three, we expect, and we're seeing it actually in some of the prototypes that we're trialing, to have higher book-to-look ratios. Four, I think we'll also be able to integrate products such as loyalty and holidays into the booking flow far more effectively. And five, I think we'd be a lot more dynamic in the way we can price and market ancillaries. Now the final, I think, element you spoke about, about customers and servicing, what also I think this new capability will allow us to do is to service all of our price products online. And I think that will, I think, give a huge amount of convenience to customers that they don't have today. About 70% of our fare products today can be serviced online. we will get that to 100% when we complete the rollout of this new capability. So, you know, we're at the start of the kind of investment cycle, but the early trends we are seeing in some of the prototypes are encouraging.

Excellent. Thanks for the detail.

Thank you. Dear participants, who hasn't asked the question yet, you're more welcome to press 911 on your telephone keypad. And now we're going to take our next question. And the next question comes to the line of Jamie Robotham from Deutsche Bank. The line is open. Please ask your question.

Thanks. Good morning, everyone. Just one from me. Nicholas, it was helpful to hear you talk about basing the staff costs and how those might lead to lower non-fuel unit cost inflation in the rest of the year. Are there any other cost areas where we should be thinking along the same lines, perhaps around aircraft ownership or engineering and maintenance, where it's going to look a bit different later in the year than it did in Q1? Thanks.

I think if you look at our individual cost lines, you saw Q1 we had higher flat supply and unit costs. you had a kind of 7% increase in employee costs and about 5% increase in ownership costs as well. So both those latter two, you'll see kind of stopping as you go through the year overall. And you'll see kind of supply costs probably keep fairly stable overall.

Thanks. Thank you. Now we're going to take our next question. And the question comes from Lan of Conadwile from Morgan Stanley. Your line is open. Please ask your question.

Hi, guys. Good morning. First question is just on the leverage. So 1.2 times, I think it's also been a billion better than last year. Could you just comment on how much of that is perhaps seasonal benefits, timing of cutbacks maybe that did or didn't happen in Q1? and perhaps just give an indication of where you might expect that to be ending up for the end of this year as a bit more of a kind of helpful comparison for how it finished up at the end of last year. On the second question, it was just a clarification question in terms of you were talking about the BA corporate volumes versus the Iberia corporate volumes. I think you said Iberia was at 85% recovered, and BA was either 70% or 75%, I'm just saying.

On the corporate travel, you said to BA volumes is about 70% overall in revenue back in the century, 72% overall. So just in terms of our leverage, you're right. Year on year, we brought our leverage down from 8.4 billion to 7.4 billion, so down 1%. and it was down about $2 billion on the year. So just focusing on the end of the year to now. So a lot of that is about just one of us, our performance, but actually you get a big working capital inflow because you've got the bookings coming in for summer overall. But hopefully those summers turns into profits and turns into changes from working capital into EBITDA. So we're not giving kind of overall guidance, but hopefully if we have that kind of strong performance that, you know, kind of consensus overall, you'd expect the leverage to come down from where it was last year.

Okay, perfect. So a year-over-year reduction, which is not indicating exactly how much. Correct.

Thank you. Thank you. Dear participants, as a reminder, who hasn't asked a question yet, you are more welcome to press star, one, one, or your cell phone keypad. Dear speakers, there are no further questions. I would now like to hand the conference over to the speaker, Luis Gallego, for any closing remarks.

Well, thank you very much, everybody, for being here today. I think we have delivered another strong set of results. We hope that we are going to continue in this way for the rest of the year. And as we said before, summer looks good, demand is strong, and our transformation initiatives are delivering results. So thank you very much, everybody. Bye-bye.