IAG has just published its half year results.
The group has also announced its first dividend since COVID-19. It has also terminated its planned purchase of Air Europa:
https://www.rns-pdf.londonstockexcha...1-2024-8-1.pdf
Strong performance for H1 2024: operating profit of 1,309 million, 49 million ahead of H1 2023 Q2 operating profit of 1,241 million broadly in line with a record Q2 2023 (1,251 million)
Continuing robust demand for travel in our markets supports positive unit revenue growth
Transformation programme helping to deliver strong margins and profit in the medium term
Focused growth in our core markets
Making good progress with operational and customer initiatives at British Airways
Continuing good operational and financial performance in Spain
Further growth in our capital-light IAG Loyalty business; now including BA Holidays
Significant increase in H1 free cash flow to 3.2 billion
Strong balance sheet: 1.1x leverage; Investment grade at S&P and Moodys; refinanced Revolving Credit Facility
Withdrawal from the Air Europa transaction in the best interests of our shareholders
With confidence in the strategy and business model the Board has approved a 3 cents per share interim dividend
We remain committed to disciplined capital allocation and distributing excess cash to shareholders
Luis Gallego, IAG Chief Executive Officer, said:
We see continuing strong demand for travel in the attractive core markets in which we operate: North Atlantic, Latin America and intra-Europe. We delivered a good performance in the first half of 2024, with operating profit 49 million ahead of the same period last year.
We are pleased to announce a return to paying a dividend, which reflects our confidence in the business, our performance and our transformation. We are delivering on our strategy and our commitment to sustainable shareholder returns.
We would like to thank our people working across the Group for their contribution to these positive results.
BA made an operating profit of £555m compared to £496m the year before.
IAG has also updated on HMRCs investigation into IAG Loyalty:
Since 2022, HMRC in the UK has been considering the appropriate VAT accounting to be applied by IAG Loyalty, which currently recognises VAT on the redemption of Avios depending on the associated redemption product, for which the vast majority are flights that are zero-rated.
The Groups current VAT accounting is based on a ruling issued by HMRC. The Group, along with its legal and tax advisors, considers the existing VAT accounting remains appropriate.
At the date of this report, HMRC has not issued a decision on what it considers to be the appropriate VAT accounting IAG Loyalty should apply and as such it is not possible to reliably estimate what the range of potential exposures are, if any.
HMRC has issued IAG Loyalty with VAT assessments to protect its position in respect of historical periods for the 31 months ended September 2020 that amount to 247 million.
Were HMRC to issue further VAT assessments, applying the same methodology as those already issued, up to 30 June 2024, the Group estimates these would amount to 710 million.
In the event that HMRC issue an adverse decision, the Group will need to advance the matter to the First-tier Tribunal (Tax) and to do so, will need to pay to HMRC, without admission of liability, the total amount of assessments having been issued to the Group at that date, which will be recoverable, in part or in full, should the Group be successful through litigation in the case.
The Directors are satisfied that it is not probable that an adverse outcome will eventuate and accordingly, the Group does not consider it appropriate to record any provision for this matter at 30 June 2024.